1951-05-17

[Stage Direction]
Fourth report of standing committee on banking and commerce.-Mr. Cleaver.


Hon. R. W. Mayhew (Minister of Fisheries):: Mr. Speaker, I wish to make a statement on salt fish markets and prices support. At this time last year there was, particularly in Newfoundland, much doubt about salt fish market prospects for the 1950 catch. Today prospects and outlook for 1951 are, however, more optimistic.
Last year there was a substantial carryover of salted fish from 1949 still in merchants' hands. The government took action to help dispose of this fish and thereby to relieve the whole Canadian salted fish trade from the pressure of over-supply. We bought substantial quantities for distribution through relief agencies. The fisheries prices support board provided guaranteed prices to fishermen for the Labrador cure. The government undertook to review the results of the 1950 marketing season on shore fish as well, and the study covering returns received by the shore fishermen in Newfoundland is now under way.
At present, prospects for the 1951 season are encouraging. In the past year in Newfoundland all the 1949 carry-over and the 1950 catch have been sold. At present forward sales are being made for fish still in the sea-a marked contrast to the situation at this time last year. There is practically no carry-over of old fish. The world supply of salted fish is likely to be slightly under last year's production. Markets are more buoyant. I was able to announce only a few days ago the sterling convertibility arrangement for Newfoundland, so that the way has been cleared for sales to Europe. Arrangements have been made to permit full sales of Gaspe cured salted fish to Italy for dollars.
We understand that the Newfoundland salt codfish association will meet this month with the Newfoundland fishermen to set minimum prices, with an undertaking to meet 80709-198
together later in the year with the fishermen's groups to work out final payments. This brighter outlook for Newfoundland sales should strengthen the export position of the maritime and Quebec salt fish trades.
As to the 1951 season, therefore, with market prospects good, the prices support board could see no justification for general prices support action in salted fish. During the year there may be some localities where, because of poor fishing, or poor quality fish, returns may not prove adequate to the fishermen. That, however, is more a question of local relief than of national prices support action.
We, along with the departments of finance and trade and commerce, will continue to be ready to help overcome marketing difficulties abroad, should these arise, and to encourage the expansion of the domestic market. Keeping in touch with the market, however, should not put us in the fish business. The responsibility for production and marketing in the Labrador cure, as well as in others, rests with the industry itself, with both fishermen and merchants. It is only under special conditions that government action under the support act should be contemplated. There is, in our opinion, no need for such special action at this time.
I have on several occasions discussed in this house the alternatives to prices support -the constructive plans for future development of our fisheries, particularly on the Atlantic coast. I am greatly encouraged by the fact that joint federal-provincial fisheries development committees have been established in Newfoundland and Prince Edward Island. These committees are seriously studying the problems of these provinces, and I believe they will give us sound and practical advice towards securing a better-balanced fishing industry. This better balance is already being achieved by the fishing industry in the eastern provinces. In Newfoundland, while cod provides the basic income, fishermen's earnings from flatfish, salmon, lobsters, capelin, and herring are continuously growing. Improved fishing techniques are providing more such varieties and also better sizes for marketing. New mechanical driers are producing better standards of quality in salted fish. The industry has built, and is adding this year, several

Fisheries
new freezing plants for fillets. It has added oil and meal plants. It is such development we want to encourage.
In the meantime, and while the development committees prepare their recommendations, we are aiding by research and application the modernization of both the salted and the fresh and frozen fish trades in eastern Canada. For example, in Newfoundland this summer we shall have nine research board engineers-some engineering new fish plants, others checking present installations in freezing plants, in smokers, and in cod liver oil plants. We are installing a new experimental drier for light salted fish at Bay Bulls. We have arranged for two Nova Scotia long-liners to fish with their special techniques in Bonavista, both as an experiment and as a demonstration of techniques.
For the shore fishermen throughout eastern Canada we are expanding our assistance to help them modernize their vessels. The federal government assistance to the construction of draggers and long-liners is now applicable to Quebec and the Magdalens, as well as to the maritimes, and it can be made available to Newfoundland on agreement with the provincial government. The regulations have been changed to increase the assistance. Whereas the payments were formerly made ;o draggers or long-liners fifty-five feet and jp they are now available to vessels forty-five feet and up. This should greatly extend the scope of the grant, which is $165 per gross ton; and it is available to single fishermen or to groups.
We believe that the progress of our Atlantic fishing industry is dependent greatly on the successful application of modern techniques, both in fishing and in processing, in doing old things in better ways, or in doing new things -new methods of fishing, processing, and distributing. Federal assistance in these directions, rather than prices support, will redound to the long-run benefit of the fishermen and their families as well as to all the coastal communities.


Mr. Higgins:: I understood the minister to say that government action is contemplated under special conditions under the Fisheries Prices Support Act. What would those special conditions be?


Robert Wellington Mayhew: I am sure the hon. gentleman would not want me to list the various possibilities. We will meet the conditions when they arise.


Gordon Francis Higgins: Could we not have some idea?


Mr. Stuart (Charlotte):: The minister mentioned that arrangements had been made for sterling convertibility in connection with 
Newfoundland. Will the same provisions apply to the maritimes?


Robert Wellington Mayhew: That applies only to
Newfoundland. It was arranged specially by the United Kingdom, not by Canada.



QUESTIONS


Mr. Catherwood:: How many persons were (a) killed; (b) injured in level crossing accidents in Canada during each of the years 1945 to 1950, inclusive, and during the months of January, February, March and April, 1951?


Mr. Mcllrailh:: Level Crossing Accidents in Canada
	Number	Number
Year	(a) Killed	(b) Injured1945 	. . . 121	4701946 	... 113	4421947 	... 151	5011948 	... 141	5011949 	. . . 140	4901950 	... 142	611January, 1951 . ..	. . . 12	124February, 1951 ..	. . . 27	79March, 1951 	. . . 14	39April, 1951 	. .. Not available	Not available


POSTAL SERVICE LIAISON OFFICERS
Mr. Noseworthy:: 1.	Has the Post Office Department a group of employees known as liaison officers?
2.	If so, how many such liaison officers does the Post Office Department employ?
3.	In what post offices are these maintained?
4.	What are the duties of liaison officers?
5.	What salaries are these officers paid?
6.	Does the Post Office Department periodically make a cost ascertainment of all mail handled?
7.	If so, has this cost ascertainment been made monthly, quarterly, half-yearly or yearly?
8.	In what post offices are these cost ascertainments made?
9.	What is the annual cost to the Post Office Department of these cost ascertainments?
10.	Has this cost ascertainment revealed that the Post Office Department is losing money on any particular type or types of post office service?
11.	H so, on what types, and what was the ascertained deficit on each type for the last fiscal year for which information is available?


Mr. Rinfrel:: 1.	Yes.
2.	17.
3.	Victoria, B.C., Vancouver, B.C., Calgary, Alta., Edmonton, Alta., Regina, Sask., Saskatoon, Sask., Winnipeg, Man., Toronto, Ont., London, Ont., Hamilton, Ont., Windsor,

Ont., Ottawa, Ont., Montreal, Que., Quebec, Que., Saint John, N.B., Halifax, N.S., St. John's, Nfld.
4.	To undertake public relations and educational work in relation to postal service.
5.	Montreal and Toronto, $3,888-$4,212 per annum; other offices, $3,240-$3,567 per annum..
6-11. The question of cost ascertainment and the dissemination of information obtained as a result was dealt with in the house on March 7, 1951. See Hansard, page 1000.



VETERANS AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. M. J. Coldwell (Roseiown-Biggar):: I
should like to direct a question to the Minister of National Defence about a matter which has just come to my attention. Are members of the special force who are discharged on account of sickness after service in Korea entitled to gratuity, clothing allowance and leave with pay?


Hon. Brooke Claxton (Minister of National Defence):: A similar question was addressed to the Minister of Veterans Affairs a few days ago, and his reply was that these matters were receiving the consideration of an interdepartmental committee.


Major James William Coldwell: May I ask the Minister of Veterans Affairs if any decision has been reached?


Hon. Hugues Lapointe (Minister of Veterans Affairs):: I think I did say at that time that medical treatment under class 2 had been extended to these veterans. They can be discharged to the Department of Veterans Affairs, receive treatment, and in the meantime receive the pay and allowances which they were getting during their service in the army.


Major James William Coldwell: They can receive pay and allowances?


Hugues Lapointe: That is right.



MERCHANT MARINE


[Stage Direction]
On the orders of the day:
Mr. Howard C. Green (Vancouver-Quadra):: I Should like to direct a question to the Minister of Transport. Will the minister make a statement to the house at an early 80709-198J
Inquiries of the Ministry day setting out the policy for the present fiscal year with regard to the Canadian deep-sea shipping industry, and also outlining the progress made in setting up a north Atlantic shipping pool? As the minister knows, the policy announced by the Prime Minister on December 9, 1949, was a temporary one for a period of one year only.


Hon. Lionel Chevrier (Minisier of Transport):: I had hoped to be able to make a
statement on that question during the consideration of my estimates, but all the items in the department, with the exception of that one and a few others, were approved by the house and I did not get the opportunity. I am still hopeful that the opportunity will be provided in the not too distant future, and if it is, I shall be glad to make a statement.


Howard Charles Green: I understand that the remaining estimates may not be reached for a considerable time yet, and this is a very pressing matter. The former chairman of the Canadian maritime commission made a speech about the north Atlantic shipping pool a few days ago in Vancouver. I would ask the minister to give consideration to the possibility of making a statement at an early day.


Lionel Chevrier: I shall be glad to do so.
I should say in fairness that I did not delay the passing of my own estimates, and I am still disposed to give the statement at the opportune time.


Howard Charles Green: Could the minister's estimates
be brought up at an early day?


Lionel Chevrier: I am prepared to go on at
any time.



COUNCIL OF EUROPE


[Stage Direction]
On the orders of the day:
Mr. Alistair Stewart (Winnipeg North):: I should like to direct a question to the Secretary of State for External Affairs. Has an invitation been received from the consultative assembly meeting at Strasbourg to send observers to additional meetings of the assembly? If so, has the government yet decided what course it will follow?


Hon. L. B. Pearson (Secretary of State for External Affairs):: I thank the hon. member
for giving me notice of this question. The answer to the first question is that no invitation has been received from the consultative assembly meeting at Strasbourg to send observers to additional meetings of the assembly. We understand that a resolution has

Inquiries of the Ministry been under 'consideration by the consultative assembly whereby an invitation might be addressed to the Canadian iparliament to be associated more closely with the Council of Europe, but this has not yet been received. If and when such an invitation is received it will, I presume, be a matter for consideration by parliament. Since the creation of the Council of Europe, Canada has been represented at the sessions of the consultative assembly by an observer. The observer for the present session is Mr. T. C. Davis, head of the Canadian mission in Bonn, Germany.



EXCISE TAX


[Stage Direction]
On the orders of the day:
Mr. H. O. White (Middlesex East):: I should like to direct a question either to the Minister of National Revenue or to the Minister of Finance. It arises out of a complaint of one of my constituents about the increased taxes on automobiles. Apparently many cars were purchased before the budget and held for delivery later. Is the minister in a position to collect from dealers the increased tax collected by them?


Hon. Douglas Abbott (Minister of Finance):: As the hon. member is aware, the tax is imposed at the wholesale level. What the contract may be between the dealer and the customer I am not in a position to say.



STEAMSHIP SERVICES


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: I
should like to direct a question to the Minister of Transport. Has the government or the Minister of Transport received any representations or communications from the government of British Columbia with respect to proposals for a joint subsidy toward the maintenance of steamer operations on the Arrow lakes?


Lionel Chevrier: When I last looked at that matter,
which was some weeks ago, no representations had been made, and it may be that they have been made since that time. I shall be glad to look into it again.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the dtay:
Mr. G. R. Pearkes (Nanaimo):: I should
like to direct a question to the Minister of

National Defence. Are men under eighteen years of age being enlisted in the active army? If so, what is the minimum age at which they are being sent overseas?


Brooke Claxton: Speaking from recollection, because I did not have notice of the question, men are being enlisted in the active army from the age of seventeen up, but only with their parents' consent. The minimum age at which they are sent overseas is nineteen.



INDIAN ACT


Hon. W. E. Harris (Minister of Citizenship and Immigration) moved: the third reading of Bill No. 79, respecting Indians.


Mr. E. D. Fulton (Kamloops):: Mr. Speaker, before the bill carries I should like to make a further attempt to have two changes made in this legislation. The first concerns section 4, subsection 2, and the second concerns the question of allowing any Indian or band of Indians to appeal to the courts against a ministerial decision. These subjects have both been debated fully and I therefore do not intend to go over the ground of the discussion and present in full the merits of the case in support of the amendment which I propose to move. I wish as briefly as possible simply to outline the effects of the amendment, and then leave it to the decision of the house whether or not the amendment should be supported.
In the Indians of Canada we have over 125,000 subjects of His Majesty. Their whole future life is to be governed under the Indian Act, and they differ from the rest of us in that way. This House of Commons must direct its mind to the question whether or not we are giving justice to these Indians, whether we are doing everything we can to place them on a basis of equality and in a position to protect their rights.
With respect to section 4, it is desired by those of us who support the amendment which I am about to move that the Indians should be given the right to have a say in decisions which are taken affecting their whole status. Section 4 gives the governor in council the power to issue proclamations which would exempt from the provisions of the bill, except sections 37 to 41, any Indian or group of Indians or Indian band. Such proclamations may be issued without prior consultation with the band. There is nothing at all in the statute which makes it essential that the Indians themselves should be consulted before these proclamations are issued.

Anything affecting the status of Indians, anything affecting the question whether or not Indians should be on the Indian list, anything affecting the right or disability of Indians to obtain liquor, anything at all except the very narrow category of subjects dealt with in sections 37 to 41 involving surrenders of land, can be changed simply by a proclamation of the governor in council.
I wish to emphasize that it is not argued that the process by which these changes are made should be altered. It is not argued that it should require a further bill or further legislation to make the changes which the minister now contemplates will be made by proclamation. We realize fully that in administering the act, day to day problems will arise. There are problems of details. There may be problems affecting only one Indian or a small number of Indians, and it would not be appropriate to insist that each of these changes must necessitate a bill and all the legislative process of passing an act of parliament. It is perfectly proper to leave those things to be done by proclamation, but it is contended that before such proclamations are issued the consent of the Indians or the band concerned should be obtained.
That seems to me a very simple proposition, and there should not be an attempt to sidetrack it by saying this would mean a process of legislation every time it was desired to take any administrative action under this act. That is not the suggestion at all, and if the amendment were adopted no such result would follow. It would mean that the Indians themselves, who are so vitally affected, would have the safeguard that before their rights could be abridged, before any change could be made in their status which might have very serious consequences for them, must be first consulted and their consent obtained. I do not believe this house would pass a bill giving any government or minister power to change the status of a white person or white community in this country by proclamation without the requirement of prior consultation and consent on the part of the person or community whose status might be changed; nor do I think we should do that in connection with the Indians.
I am not moving the amendment formally at the moment, but the motion will be simply that the bill be referred back to the committee of the whole with instructions that the committee have power to amend it by inserting in section 4(2) the words "with the consent of the Indians or band concerned." That is all it is. It does not say that it has to be by any other process, or that it cannot be by proclamation. It simply says that the consent of the Indians or band concerned must first be obtained.
Indian Act
The other part of the amendment I intend to move relates to the right of Indians to appeal to the courts. I am not going to attempt a legal argument in any detail, but I think it was agreed yesterday by the minister and the hon. member for Lake Centre (Mr. Diefenbaker), who has been the prime proponent of this amendment, that many administrative decisions and orders are made by the minister from which there is no right of appeal. To that extent the Indians are entirely different from and in an inferior position to the white population. Surely, if we are going to make them equal at all, one of the first respects in which we should make them equal is by giving them equality under the law with white citizens, one of whose most valuable rights is the right to free recourse to the courts whenever they think themselves aggrieved.
Under the Indian Act there are a number of instances in which the Indian, whose future and fortune can be vitally affected by administrative decisions made by the minister or his officials, has no recourse to the courts and no one further to whom he can appeal for the redress of grievances. This not only places the Indian in a position of inferiority, which he is entitled to resent and which in many cases he does resent, thereby imposing another barrier in the way of this equality we wish to create, but it is nothing short of an injustice to place and keep the Indian in this inferior position in comparison with the white citizens of this country. I therefore move, seconded by the hon. member for Brant-Wentworth (Mr. Charlton):
That the bill be not now read a third time but that it be referred back to the committee of the whole house with instructions that such committee have power to amend the same by inserting in clause 4 (2) thereof, after the word "may" at line 18, the following words: "with the consent of the Indians or band concerned."
And further that such committee have power to amend the said bill by inserting the following as section 123:
"Nothing in this act or elsewhere shall in any way be deemed to remove, abridge or otherwise restrict the rights of Indians to full access to the courts of the land, and every Indian and every band of Indians shall have the full right to appeal to the appropriate court of the province which would otherwise have jurisdiction, from any decision of the minister hereunder."
And by renumbering present sections 123 and 124 as 124 and 125.


Mr. E. T. Applewhaite (Slceena):: Mr. Speaker, I am going to ask that the amendment be not adopted by this house but that the bill in its present form be permitted to go into effect. With respect to section 4 and the non-existent section the hon. member would propose to add, from my point of view, as representing a riding in which there is a large number of Indians at various

Indian Act
stages of development, at the moment I would prefer that the discretionary power to bring into effect the provisions of section 4 should remain with the governor in council, advised, as it doubtless will be, by the experienced men in the Indian affairs branch. I would point out, though I admit this is not a strong argument, that should the governor in council make a mistake in the application of this act, upon that mistake being brought to its attention the last line of this section also permits the revocation of any such proclamation by the governor in council.
As for the addition of a section such as was so well asked for recently, by the hon. member for Lake Centre (Mr. Diefenbaker), which would state as a fact what the minister has told us is now the law, I think the reply by the minister to the hon. member for Lake Centre should satisfactorily dispose of that argument. However, the point I wish to make at the moment I think is of considerable importance when considering this bill as a whole. This bill is far from perfect, as I am sure the Minister of Citizenship and Immigration (Mr. Harris) would be the first to admit. But as yet its imperfections are largely unknown. Until we have some experience with the new sections of the bill we cannot say definitely where it has fallen short or where it may have gone too far. I took it upon myself to ask the minister in the committee whether, if this bill went through, he would undertake within a period of approximately two to ,hree years to call together, not necessarily i committee of this house but a representative group of Indians from right across Canada, similar to that which was called together at the end of February last, with a view to going into the way this act has operated so that such corrections as might be found necessary could be made on the basis of experience and not conjecture. May I read into the record this part of the minister's reply:
Now, I did not go the step further, and tell the conference that they would be reassembled in two years' time, but I am prepared to give the committee the assurance, within the limits stated by Mr. Applewhaite, that it would be the intention of this government to invite representative Indians to another conference similar to that held in February last.
Under those circumstances, Mr. Speaker, I submit, and I think I have the interests of the Indians fully at heart, as I know the member for Kamloops has, that the best way in which we can show our desire to make improvements for the Indians of Canada is to pass this bill, which has been thoroughly investigated by a committee, and get it on the statute book.


Mr. J. H. Blackmore (Leihbridge):: Mr. Speaker, just to illustrate that the hon. member for Kamloops (Mr. Fulton) has not been without some justification in making this motion, I should like to read into the record a press report which appeared not so long ago. As I recall it, it appeared in the Ottawa Citizen, and the heading is "Act threatens extinction of Indian people." There is a question mark following that title. The article reads:
A three-man delegation from the Six Nations Indian reservation near Brantford warned here yesterday that passage of the Indian Act in its present revised form would threaten the Indian people with extinction in two years' time.
They said if the act became law, the Indians across Canada would become "bitter enemies" of the present federal government.
The delegation centred its fire on the compulsory enfranchisement clause of the act.
Under this clause, a government appointed committee may enfranchise an Indian whether or not he has applied for such enfranchisement. Once he is given the vote, the Indian loses special reservation rights such as free schooling, free hospitalization and exemption from taxes.
The delegation objected to section 4 of the acr giving the minister (in this case, citizenship and immigration minister Walter Harris) unlimited powers with no recourse of appeal.
Criticism was also voiced of the provision under which an Indian who asks for the vote must sign a waiver eliminating his exemption from taxation.
Members of the delegations who saw Mr. Harris, were: E. P. Garlow, chief councillor of the Six Nations Indian council; A. C. Moses, council secretary, and James Powless, councillor.
Perhaps these men were extreme in their views, but I am concerned lest the opinion which is expressed by these men is the opinion held by altogether too many Indians across Canada. Consequently, I am not sure that the member for Kamloops has not done the country a service in bringing this matter to the attention of the house. I do not see why there should not be a provision giving the Indians, when threatened with the application of these clauses of the act, the right to defend their rights in court against the will of the department.
Notwithstanding what the minister has said, and notwithstanding what the past history has been, the Indians do not possess an effective right to appeal to the courts in respect of matters of this kind. One of the main reasons is that the average Indian on the average reserve in Canada is by no means a wealthy man. As a matter of fact I believe it could be safely said that the average Indian on our reservations is a very poor man. The average band on a reserve would have much difficulty in raising sufficient money to enable any Indian to defend successfully his rights in court. Since this condition obtains it must be obvious that whether or not an Indian has

the legal right, he has not the financial strength to enable him to defend successfully his case in any court.
I should feel much better about the whole situation if some commission or some body were set up which would take a part comparable with that which is taken for a veteran by the pensions advocate. The government would put at the disposal of the Indian, men who would be highly trained, and whose business it would be to defend the Indian. By appointing such a commission the government would acknowledge the disability under which the Indian now labours, through no fault of his own, and would express complete willingness that everything should be done to defend the position of the Indian. I think, Mr. Speaker, that anything less than that is not sufficient in our time, having in mind the condition which obtains throughout our Indian population at present. I would be prepared, therefore, to support the amendment moved by the member for Kamloops.


Mr. Mclvor:: I was late in entering the chamber, but I was engaged in the king's business. Had I been here, I would have voted against the amendment.


Mr. Brown (Essex West):: I was paired with the hon. member for Elgin (Mr. Coyle). Had I voted, I would not have voted for the amendment.


Mr. Ross (Souris):: I was paired with the hon. member for Melville (Mr. Gardiner). Had I voted, I would have voted for the amendment.


Mr. Speaker:: Is the house ready for the question?


Some hon. Members:: Question.

Indian Act


John Horne Blackmore: Mr. Speaker, before the vote is taken I should like to say a few words more as regards this important measure.
We of this parliament are now taking a last look at Bill 79, an act respecting Indians. We have toiled long and earnestly. The task we have wrestled with has not been, and is not now, an easy one.
The problem connected with Canada's Indians, admittedly a highly complex one, complex if not baffling, is not a problem of this generation's making. We have inherited it; it has been left on our doorstep, so to speak. I urge upon all, both non-Indian and Indian, patiently to bear this important fact in mind.
There is too much of a tendency I fear on the part of a number of our Indians and non-Indians to feel unkindly toward each other. There is no justification whatsoever for any bitterness between the two groups of Canadians. We must simply recognize that we have a difficult problem to solve, and we must face this problem frankly and honestly, and without passion, and do the very best we can to solve it in the interests of all.
No blame can be attached to the men and women of our time for the mistakes that may or may not have been made in days now gone, or for the weaknesses that may have manifested themselves in the relations between the two groups. On the other hand no credit is due us for the noble achievements of our fathers, both Indian and nonIndian, whose efforts preceded ours-and there were noble achievements, on both sides.
In debates centring around the Indian Act much has been said which might seem to reflect upon the fathers of our nation, both Indian and non-Indian. In so far as any such impression as that might have been gained through anything I have said, I wish here to disavow any intention of reflecting in any way upon the men and women of earlier times in Canada. I believe that on the whole they did the best they could, and, as I have said noble achievements must be credited to them.
Understanding, forbearance, prudence and skill were manifested by Indian and nonIndian in those dangerous days, while we were learning to adjust ourselves to each other. And. there was confidence, hope and faith on both sides. Splendid efforts were made both by Indian and non-Indian, and those efforts in great measure were crowned with success-a success for which all of us have cause to be deeply grateful to our forebears.
To realize how much truth there is in what I have just said, all we need to do is
fMr. Speaker.]
to recall the difference which generally prevailed in the feelings between Indians and non-Indians in Canada, and the feelings which prevailed in relations between Indians and non-Indians in the United States. My father and mother came to Canada from the United States in 1892 and were well qualified to impress upon me how splendidly different was the situation in Canada from that in the United States. My father told me that while he was in Idaho, where he lived before he came to Alberta, he never went into the wilds without having a rifle and a six-shooter within reach. When they came to Canada they found there was no danger whatsoever. The mounted police seemed to have everything well in hand and the Indians seemed- to be happy that they had.
It rests upon our generation to do its full part in the light of the knowledge and facilities at our disposal. We have far greater knowledge and we have far more facilities and therefore we can give the Indians far better times in the days to come if we only realize how to use the resources which have been placed at our disposal by the Almighty.
I feel we in this parliament have done a workmanlike job. I want the Indians who may be reading this to know that that is how I feel.
Recently I read to the house an excerpt from an article entitled, "Who is an Indian?" which was reprinted from the Albertan of Calgary, Alberta, of April 25, 1951. This article is signed by John L. Laurie, secretary of the Indian Association of Alberta. I want to give Mr. Laurie all the credit which is his due. I know of no man who has more selflessly and indefatigably exerted himself in the interests of better times for the Indians than this same John L. Laurie. He is a schoolteacher by profession and has done his work for the Indians on the side. He risked his health and in fact has impaired his physical condition to a dangerous point. I believe the Indians of Canada could well afford to set up monuments to Mr. Laurie on every reservation from coast to coast. In the opening paragraph of this -statement, Mr. Laurie said:
The new Indian Act, in its present revised form, is an excellent piece of legislation. The government has met the most serious objections of the Indians themselves, and seems genuinely interested in giving these people a charter that will assure their steady progress and development.
I agree fully with every syllable of that statement. This does not mean that I believe the bill is all that could be desired, neither does it mean that I think the attitude of the minister, of the department or of the government is all that could be desired. I am not sure that the position of the Indians

is appreciated adequately even yet. I think the minister has done literally wonders in training and conditioning himself since he took office, and he is entitled to those words at least, if not to stronger words. But he will be the first to maintain that there might be room for improvement.
As an illustration of what I have just said about appreciation may I refer to the case of the Six Nations Indians who are very unhappy about the situation generally at the present time. May I read to the house a statement which was made on May 11, 1914, by the Hon. Frank Oliver, as reported on page 3537 of Hansard. The Hon. Frank Oliver was a prominent Liberal and one of the finest men ever produced by western Canada. His words are worthy of note by the minister and his department and by the people generally throughout Canada. He said:
But there are bands of the Six Nations Indians located on the Grand river in Ontario who, I maintain, are in a different legal position from any Indian bands who are native to the country. These Indian bands on the Grand river had their original home in the United States. At the close of the war of the revolution they emigrated to Canada and were given lands under a special treaty, not as subjects of Great Britain, but as allies of Great Britain, and I maintain that the holding of these Six Nations Indians on the Grand river is of such a kind that this parliament has no right to interfere with it. I admit that parliament has the power to interfere with the rights of Indians under treaty made with this government, but I say that this parliament has no right to interfere with a treaty made between the imperial government and the Six Nations Indians.
It is to be granted that this creates a difficult situation for the minister and the department, but difficult situations have been met in former times. After all, the men of our country who have got along with the Six Nations Indians since Canada became a nation have in the main shown pretty well the way in which we can get along with these great people without violating any of the things which they hold sacred.
There are other considerations which I have referred to and which I believe I should elaborate on to some extent before I resume my seat in what is perhaps the closing speech of this debate. I have referred to the fact that traditionally the Indians revere the memory of the great white god who visited America. In order to appreciate the Indians and in order to appreciate the position of the Six Nations Indians we have to bear that fact in mind. I wonder if Canadians generally appreciate the historical and religious background of the Six Nations Indians, and also the background of the other Indians in this country?
May I read from a document which was placed in my hands by the Six Nations 80709-199
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Indians which rather emphasizes what I have just said. This document is entitled, "Traditional History of the Confederacy of the Six Nations" and was prepared by a committee of the chiefs and presented by Duncan C. Scott, F.R.S.C., and read on May 16, 1911.
I read from page two as follows:
There is no doubt in the mind of the writers of this preface that many - of the ancient traditions of the Six Nations have become much modified and some have been long relegated to oblivion owing to the fact that in the earlier history of these people there were for a long time no members of the band capable of rendering these traditions in writing and thus preserving them intact to their posterity.
It is, however, a noteworthy fact that the league of the Five Nations confederacy (now known as the Six Nations) as constituted centuries ago by De-ka-nah-wi-deh and his associates, has been maintained in accordance with the rules of the confederacy as laid down by the founder of the league; and that the installation of the lords or chiefs as rulers of the people, laid down in these unwritten rules hundreds of years ago, is still strictly observed and adhered to by the chiefs of the Six Nations and people.
If a person weighs those words carefully he will look upon the unrest which presently exists among the Six Nations Indians with a considerable amount of sympathy. Who might this De-ka-nah-wi-deh be? I am told that the meaning of the word is "miracle child" which immediately suggests our Saviour, the Lord. Was it Christ? It could have been. Christ could have come over to America after he was resurrected. As far as I can see, there is no sufficient reason why anyone should suppose he could not have done that or did not do so.
May I turn to the Bible for a minute or two in connection with this matter? I am going into some detail here because I do believe that there is danger of unhappy relations existing between the minister and the department and the Six Nations Indians, and that probably these fine people may not be properly understood. Consequently I am holding up the progress of affairs this afternoon so that this other aspect of the matter may be considered by the Canadian people. We find that in the book of John, chapter 10, verse 16, there appear the following words-and Christ is speaking:
And other sheep I have, which are not of this fold: them also I must bring, and they shall hear my voice; andj there shall be one fold and one shepherd.
At no place in scripture is it indicated where Christ went to find these other sheep which were not of the fold in Palestine. Who is to say that the people of America were not these sheep, and that Christ did not come to these people? No one can definitely say that could not have been the case. May I now turn to Matthew, chapter 15,

Indian Act
verse 24, for a statement which also has some bearing on this matter. It is referring to Christ and reads:
But he answered and said, I am not sent but unto the lost sheep of the house of Israel.
If it should be found that the Indians are descendants of a branch of the Israelites, then considerable meaning can be derived from those two passages of scripture.
Having said as much as this, I think I should give some evidence from the history of America, It will take me about five minutes to do so, and will be of value to those who may read these remarks and desire to check the validity of what I have been saying. There are about fifteen or twenty great writers who have given much attention to the aborigines of America seeking to find out what their beliefs were, and what their origin was. Among these are A. H. Verrill, Lord Kingsborough, H. H. Bancroft and the Marquis de Nadaillac. I should like to give brief quotations from the works of each of these men before I close. Let us begin with A. H. Verrill. He wrote a work entitled "Under Peruvian Skies", published in 1930. In his works we find these words:
Among the Mexicans, the Mayas and the preIncan and Incan people of Peru there was a persistent, universally believed tradition of a bearded white man who visited their lands, taught them their civilizations and religions and then mysteriously disappeared. The tradition tells of this bearded god having reached Mexico and Yucatan in a "magic ship," and the tradition of the first Inca- "Manko Kapak"-having appeared from lake Titicaca and having declared himself the "Son of the Sun."
Lord Kingsborough in his monumental work, "Antiquities of Mexico" in nine volumes, published from 1830 to 1848, has this important statement to make bearing on the subject I am discussing:
The Aztecs have a tradition of a god suffering and crucified named Quetzalcoatl, and of one preceding Him to prepare the way and call them to repentance. Tezcaltlipoca offered Him a cup, calling him "my Son," of his unwillingness to taste and weeping bitterly after having drunk its contents; forsaking temporal kingdoms for spiritual, being called away by the Father. At His departure there were four earthquakes. He promised to return again and redeem his people.
Anyone who cannot see quite clearly indications of the story of Christ there will probably be unfamiliar with the story of Christ as given in our bible. May I turn now to H. H. Bancroft in his rather remarkable work, "Native Races", in five volumes, published in 1883. I should like to refer to the following passage:
Although bearing various names and appearing in different countries, the American culture-heroes all present the same general characteristics. They are all described as white, bearded men, generally clad in long robes; appearing suddenly and mysteriously upon the scene of their labours, they at [Mr. Blackmore.l
once set about improving the people by instructing them in useful and ornamental arts, giving them laws, exhorting them to practice brotherly love and other Christian virtues, and introducing a milder and better form of religion: having accomplished their mission, they disappear as mysteriously and unexpectedly as they came; and finally, they are apotheosized and held in great reverence by a grateful posterity. In such guise or on such mission did Quetzalcoatl appear in Cholula, Votan in Chiapas, Wixepecocha in Oaxaca, Zamna, and Cukulcan with his nineteen disciples, in Yucatan, Gucumatz in Guatemala, Viracocha in Peru, Sume and Paye-Tome in Brazil, the mysterious apostle mentioned by Rosales in Chile and Bochica in Colombia.
There are some of the names by which this great white god is known in various parts of America. In every ease this great white god possesses the same characteristics. They are closely similar to those possessed by De-ka-nah-wi-deh, who is revered in the traditions of the Six Nations.
May I quote one more short passage on this matter, this time from de Nadaillac's work, "Prehistoric America", published in 1885. There will be those of course who will think that the Indians got these ideas about Christ from missionaries who came to this country. The following passage will disabuse the minds of such. It reads:
No dissemination of merely Christian ideas since the conquest is sufficient to account for these myths.
The Marquis de Nadaillac has given thorough study to this matter and supports his statement adequately. There is no need here to refer to the elaboration in which he indulges in his work. Those who are interested can get the work. Some of these books are in our parliamentary library, where those interested can study these matters themselves.
Having said thus much, Mr. Speaker, in the hope that we may come more and more to appreciate the Indians and sympathize with them, I will close by saying that our generation will do well to take up the Canadian Indians as a solemn obligation and a sacred responsibility.
Motion agreed to and bill read the third time and passed.



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. Beaudoin in the chair.

[Stage Direction]
1. Resolved, that schedule A to the customs tariff, being chapter forty-four of the Revised Statutes of Canada, 1927, as amended, be further amended by striking thereout tariff items 216f, 296e, 386 (p), 403(e), 409f, 410g, 410h, 410i, 410j, 4101, 410o(i), 410p, 410q, 410r, 410s, 410t, 41Du, 410v, 410w, 410x, 410z, 435, 440k, 475, 523g, 682, 705 and 708 the several enumerations of goods respectively, and the several rates of duties of customs, if any, set opposite each of

the said items, and by inserting the following items, enumerations and rates of duty in said schedule A:
Douglas Charles Abbott: Mr. Chairman, when we
were considering the customs tariff resolution the other evening the hon. member for Eglinton, the hon. member for Acadia, and perhaps some other members, asked that an opportunity should be provided to discuss the Torquay agreement. The hon. member for Greenwood asked me if any of the items in the customs tariff resolution were related in any way to the Torquay agreement, and I told him they were not. I promised at that time to take up with my colleagues the question as to whether it would not be desirable to afford an opportunity to consider the agreement. Hon. members will have seen on the order paper a motion in the name of the Prime Minister asking that the Torquay agreements and related matters be referred to the banking and commerce committee. If it meets with the convenience of the house, I would hope that we might be able to bring on that motion for consideration early next week at which time members who wish to discuss the question generally might do so. Then the motion could be passed and the agreement referred to the banking and commerce committee. There Mr. Hector McKinnon, who was the acting head of the delegation, would be available to hon. members for detailed discussion. But I repeat what I said to the hon. member for Green-' wood the other evening, that the particular items here are not in any way related to those agreements.


Howard Charles Green: There are two matters I should like to place before the minister. The first has to do with this matter of including in item 409f sprinkler irrigation systems. We had some discussion about that type of equipment when this resolution was last up for consideration, and I find now that there was considerable discussion in the house at other sessions. For example, on November 10, 1949, at page 1630 of Hansard, we find a statement by the parliamentary assistant in reply to a question raised concerning sprinkler irrigation systems, in which he said:
I do not think that this matter comes under the Department of Finance, but I am quite sure that if this new equipment-
He was referring to sprinkler equipment, -which apparently is being used so successfully in western Canada, reaches any real volume of sales it will not be very long before the industrialists of eastern Canada will be using Canadian aluminum to satisfy the demand. That is perhaps the only argument we have for the retention of such an item.
There the parliamentary assistant was arguing that if Canadian manufacturers could 80709-199J
Customs Tariff
build up their resources so they could manufacture this equipment and sell it at reasonable prices, they were to be encouraged to do so. The following year this equipment was again discussed, and at page 2579 of Hansard for May 17, 1950, we find the parliamentary assistant saying:
The question was raised a year ago by the hon. member for Kamloops and, I think, the hon. member for Calgary East, with respect to the complete portable irrigation equipment. That situation has been adjusted; there is an ample supply available in Canada today. I am told, however, that there is a temporary shortage of sprinkler heads. This has been brought to the attention of the department and they are trying now to see that a satisfactory supply is made available; or if that cannot be done an adjustment in regard to the tariff will be carefully considered. There is no adjustment in this tariff.
There the parliamentary assistant was enunciating government policy as being the encouragement of the production of these systems in Canada, just as had been done the preceding ye.ar. As the minister knows, Canadian firms are now in a position to supply the need. Then the hon. member for Kamloops asked:
Then do I understand that if an adequate supply of sprinkler heads cannot be made available domestically the department will consider an adjustment in the tariff for future years?


Mr. Sinclair:: That is one of the items for discussion at Torquay this summer.
There we find the Torquay negotiations coming into the picture. The other evening the minister explained that Canada had not been successful in getting any consideration from the Americans on this type of equipment in the negotiations at Torquay, and of course such equipment is not included in the agreement between the two countries. It does seem to me that in view of these facts, first that the producers of equipment have been led to believe that they should get themselves in a position to produce these sprinkler systems, and second that Canada did not get any concession in this connection from the Americans at Torquay, in all fairness these sprinkler irrigation systems should not have been included in the changes set out in item 409f, and I would hope the minister might see his way clear to withdraw that type of equipment from these changes.
The other matter about which I would like a statement is the proposed dumping duty on British cars. For some time these cars have been coming in without the imposition of a dumping duty, but some weeks ago a statement was made that the provision which relieved them of the danger of having a dumping duty levied was to be withdrawn at either the end of April or the end of May.


Douglas Charles Abbott: The end of May.

Customs Tariff


Howard Charles Green: What is to be the policy? It does seem to me that the importation of these British cars has served a very useful purpose. I know many hundreds of them have been imported into Vancouver, where they have been sold at prices very much below the prices of cars made on this continent. This business has greatly helped the British, in that as a result they are in a much better position to purchase Canadian goods. I would doubt the wisdom of stopping that trade by means of a dumping duty. I would ask the minister to deal with these two questions.


Douglas Charles Abbott: As my hon. friend has pointed out, the question of the sprinkler systems has been under consideration for two or three years. I understand they are a relatively new development. When, the matter was first raised in the house I think, they were very new as far as Canada is concerned, and I believe they are still quite new here. My information is that it is only recently that manufacturers here have commenced to manufacture this type of equipment. I had the officers of my department make a very careful investigation of the business, the sources of supply and that sort of thing. It was clearly demonstrated to my satisfaction that this equipment was used primarily in agriculture rather than for irrigating golf courses and things like that, and I therefore came to the conclusion that it came within the broad group which Mr. Ilsley announced in 1944 would be admitted to Canada free of duty.
Before we decided to take it off the list and admit it free we did ask our negotiators at Torquay to ascertain whether the Americans would be prepared to give anything in return for such a concession. We found they were not; and rather than allow an industry to be created in Canada behind a tariff wall which might be even more difficult to remove at a later date, we came to the conclusion that the tariff should be removed this year; and to that decision I think we would have to adhere. In the case of the one manufacturer in particular whom I saw personally, and with whom I know the hon. member for Vancouver-Quadra is acquainted, I am looking into the question of whether some relief can be afforded in connection with the parts which were imported prior to the introduction of the budget, but that is still under investigation.
As to the question of the dumping duty, I am very happy that my hon. friend has raised the question because I should like to make a fairly comprehensive statement as to the position of the dumping duty, more particularly as it relates to British motor cars. As the committee is probably aware,

the basic provision of Canada's anti-dumping legislation is section 6 (1) of the Customs Tariff, which reads as follows:
In the case of goods exported to Canada of a class or kind made or produced in Canada, if the export or actual selling price to an importer in Canada is less than the fair market value or the value for duty of the goods as determined under the provisions of the Customs Act, there shall, in addition to the duties otherwise established, be levied, collected and paid on such goods, on their importation into Canada, a special or dumping duty, equal to the difference between the said selling price of the goods for export and the said value for duty thereof; and such special or dumping duty shall be levied, collected and paid on such goods although not otherwise dutiable.
As the committee again will probably recall, Canada's first anti-dumping legislation was introduced in 1904 by the government of the day headed by Sir Wilfrid Laurier. Details of that legislation have been amended from time to time, but the present clause is substantially as it was established in 1904, and subsequently maintained by other low-tariff Liberal prime ministers. The antidumping legislation, as it will be appreciated, made it possible for tariff rates to be reduced greatly without leaving Canadian producers open to unfair competition from dumped goods. The committee will recall that as long as an article is imported into Canada at no less than the fair market value in the country of origin, the dumping duty does not apply.
The provision introduced in 1904 complemented Sir Wilfrid's policy of consistent tariff reduction, and indeed during the forty-five years since then the anti-dumping clause has formed an integral part of the traditional Liberal policy of having low tariffs, but at the same time not sacrificing Canadian industry and agriculture to unfair competition from abroad. As the committee is aware, automobiles enter Canada from the United Kingdom free of customs duties, as well as from other British preferential sources. I suggest it would be difficult to defend this exemption from the regular duty if dumping in Canada were to be permitted permanently.
Canada's anti-dumping duties have never affected the importation of British automobiles appreciably. They are not applicable unless dumping occurs, and normally British cars are not dumped in Canada. However, in 1948, home market values of British automobiles in terms of sterling were high in relation to the price of Canadian cars at the then exchange rate of $4.03 to the pound. Consequently British motor vehicle producers found it necessary to export at prices below the home market value if they were to expand their sales in Canada to the desired extent. Thus if Canada's anti-dumping legislation had

been kept in force and had been applied rigidly in 1948, it would have had an adverse effect on the sales of British cars in Canada. In view of this situation the Canadian government took action by order in council to suspend the application of section 6 of the customs tariff in respect of automobiles. This suspension also applied to some other kinds of goods where the circumstances were similar.
Under the circumstances that prevailed in 1948 and early 1949, there was a real need for this action. However, since the devaluation of sterling in September, 1949, there has been no need for British automobile manufacturers to dump their products in Canada. Most of them, virtually all of them, have not done so. Accordingly the reinstitution of the Canadian anti-dumping provisions under present circumstances will not affect the principal makes of British automobiles at all. My information is that there is only one or two of the more expensive cars which, at the present time, would be affected. I have no doubt that will be rapidly corrected. As I say, there may be one or possibly two British companies who may be affected to some extent, but they can quite easily conform to the provisions of the law.
When the anti-dumping duties were suspended in 1948 the suspension applied to imports from any country. The suspension could not be limited exclusively to British cars, because the general agreement on tariffs and trade forbids discrimination in matters of this sort. However, the need to make the suspension non-discriminatory did not occasion any difficulty until recently because imports of cars from the United States and certain other foreign countries were limited by quota under the Emergency Exchange Conservation Act. As I have pointed out to this house on other occasions, that gives a most decided advantage to the British motorcar manufacturers.
Since the government suspended automobiles from the anti-dumping provisions in 1948, conditions have changed in two important respects. The import quota restrictions have been removed from cars from the United States, and sterling has been devalued by about thirty per cent. British cars can now be sold in Canada readily without resort to dumping. There is no longer any need to continue the suspension of dumping duties in order to help imports from Britain. Moreover, there is a danger that if these exemptions were continued indefinitely they might be abused by exporters in other countries.
The following considerations, Mr. Chairman, are I think relevant to the government's
Customs Tariff
decision to terminate the suspension of the anti-dumping provisions in respect of automobiles as of May 31 next.
First, after the devaluation of sterling in September, 1949, it was no longer necessary for British automobiles to be dumped in Canada. Second, imports of United States and other foreign cars are no longer subject to any quantitative restrictions. Accordingly, continuation of the suspension of anti-dumping duties might benefit foreign cars more than those from Britain. Third, if the suspension were continued indefinitely, Canadian automobile manufacturers would be convinced, and might be able to convince others, that they had a legitimate grievance because their competitors would be able, if they so desired, to dump in Canada at will. This would make it difficult to defend the continued free entry of British automobiles. Fourth, the action which the government took in 1948 to suspend the application of antidumping legislation to automobiles and certain other products was regarded from the start as a temporary measure rather than a permanent change in government policy respecting dumping. There was no intention of continuing this suspension any longer than required in order to deal with a particular condition that no longer exists.


Mr. Thatcher:: Mr. Chairman, some months ago I had something to say about these dumping duties on cars, so I was interested in hearing the minister's remarks this afternoon. But I still cannot go along with him in his explanation of the reasons for reimposing these dumping duties. If British competition in the form of these small cars was hurting the Canadian automobile industry in some way, I could understand it. But in Canada today I think I am correct in saying there is little or no unemployment in the automobile industry. They are working at capacity, and you still cannot get a Chevrolet, Plymouth or a Ford without waiting for it. I believe there have been record sales for these cars-


Mr. Cruickshank:: Might I interrupt the hon. member to ask a question?


Wilbert Ross Thatcher: Yes.


George Alexander Cruickshank: Is the hon. member in the market for a Chevrolet? I have an excellent one.


Wilbert Ross Thatcher: I am talking about new cars, not second-hand ones. However, Mr. Chairman, the Canadian automobile industry today, I think I am correct in saying, can sell all the cars it can make. I suggest that Canadian consumers are having a difficult time paying the prices that some of these Canadian car manufacturers are demanding.

Customs Tariff
These English cars fill a place in the low price field, and I believe they are really needed. It the time comes later when these British cars-


Douglas Charles Abbott: None of these low priced cars are paying any dumping duties now because the manufacturers have stopped dumping. They are coming in free.


Wilbert Ross Thatcher: Then why not leave the dumping duties the way they were?


Douglas Charles Abbott: If my hon. friend would like an answer to that now, I can give it. I thought I had made it clear that the dumping clause in the Canadian tariff is and has been for forty-five years a fundamental part of the tariff. Its purpose, and its sole purpose, is to prevent unfair competition. Any exporter in another country can send his products to Canada, and if he sends them here at a value which is not below the fair market value in the market in which they are produced the normal rates of duty apply or they come in free. There have been long discussions in this house in years past as to the very serious effect there may be upon Canadian domestic producers if people in foreign countries can dump their surplus production in Canada at prices which bear no relation to the value of the article.


Wilbert Ross Thatcher: Mr. Chairman, I accept the statement of the minister, but I still cannot agree with him. For many years I have listened to the Liberal party say that they believe in freer trade. The minister says, we are going to give you freer trade but we will have to have these dumping duties. It does not seem to me to be a consistent policy. I have heard the Minister of Finance tell the British car industry to get their prices down and become competitive, to produce a product that would sell on the Canadian market. Then he said they can earn dollars for England and in turn can buy your wheat and your farm products. It seems to me that the British automobile industry has done this, and the minute that they have got their prices down to that level, Canada goes and puts this dumping duty on. I say that this dumping duty is completely undesirable, that it is inconsistent with Liberal policy of freer trade, and that I think it should be put back in the same state as it was prior to May 31.


Edmund Davie Fulton: May I ask the minister if he can give us this information? Let us take the case of an Austin car which sells for around $1,400, I believe. Has there been any difference in the selling price at which that car was sold in Canada prior to the restoration of the dumping duties and the price at

which it sold in Canada after the restoration of the dumping duties? Can he give us a concrete example?


Douglas Charles Abbott: The actual situation is that the dumping duties are still suspended and will be suspended until the end of this month. But the export price of Austin cars, to which my hon. friend refers, to Canada, now is such that, if the dumping duties had not been suspended, it still would not make any difference because there would not be a dumping duty applicable. In other words, the export price of the particular car to which my hon. friend refers is a price which represents the fair market value in the United Kingdom; and I believe that has been the case ever since sterling was devalued.


Mr. Macdonnell (Greenwood):: Did the
minister not say that there was one exception to that?


Douglas Charles Abbott: I am informed that there is; but until the first of June I cannot prove that. I think that it will be found that in the case I mentioned-and perhaps I may mention the name

namely the Vauxhall car, which is a more expensive car, it is still being exported to Canada at a price which would attract a dumping duty if the dumping duty were still applicable.


Herbert Wilfred Herridge: On May 3, when this resolution was under discussion, I brought to the minister's attention the fact that the Americans were subsidizing apple exports to other countries at the rate of $1.25 per box. At that time I said that included Canada, but I was mistaken. I should have said that because of the large volume of exports going out of the United States, the greater volume of apples exported received a subsidy of $1.25 a box, which makes it possible for the United States exporters to dump apples into Canada at an extremely low price. The minister at that time said that he would have the situation checked. Has he any information to give us at this time?


Douglas Charles Abbott: I believe that my parliamentary assistant has some information.


James Sinclair: The Department of Agriculture and the Department of National Revenue looked into the situation and found out that the United States' subsidy is not paid on sales on the North American continent. The subsidy was mainly for ECA shipments and for assistance in getting rid of a large surplus of apples which the Americans had. There is an excellent statement on apple holdings in the Canadian Grower of April 23. I do not know that it is necessary to put it on record. But Canadian growers themselves feel that British Columbia apples in particular

are holding their own on this eastern market. It is the same problem as the Canadian growers have, because in the Okanagan valley there is a surplus of McIntosh Reds at the moment.
While I am on my feet, I might say that there are two small amendments-


Edmund Davie Fulton: If the parliamentary assistant will permit me to interrupt, may I say that I think that statement should not be allowed to go unamplified. The reason British Columbia apples held their own on eastern markets in recent months is that, in order to hold that market, the producers sold them at less than the normal price. They sold apples at $1 a box, I think it was; although it is true that they sold apples on this market, they had to sell them at the low price of $1 a box because of what amounted to a dumping duty by American producers.


George Alexander Cruickshank: And they are better
apples too.


Edmund Davie Fulton: I agree with the hon. member for Fraser Valley that they were better apples; and if it were not for dumping duties, subsidies or things like that, they could hold their own and win in any market in the world.


George Alexander Cruickshank: Hear, hear.


Mr. Laing:: I think an important factor in this apple business is that British Columbia delivers her apples to one particular level in the United States market; and the removal of the lower price United States apples from the market has resulted every year in a sale by British Columbia-as it has since last year, of two and a third million boxes-at the highest price of any apples exported from British Columbia. They demand there an extremely high grade, particularly of Delicious, a few Winesaps, and some McIntosh Reds. They go principally to several acknowledged and long-time markets in the United States, like New Orleans. Prices as high as $3.55 a box, f.o.b. Okanagan, have been paid for those apples, -all extra fancies. The removal of the lower grades from the United States I think has kept that market open for our highest grades, longest-priced British Columbia apples.


Douglas Charles Abbott: I have forgotten how the
question of apples arose. I know that my hon. friend asked a question about them, but they are not actually included in these tariff schedules.


Herbert Wilfred Herridge: I have obtained the answer.


Douglas Charles Abbott: I think the matter arose in connection with the Torquay agreements; and it was following that discussion that I
Customs Tariff
arranged to have placed on the order paper a resolution which I hope we shall discuss on Monday.


Mr. Wright:: There is one question I should like to ask the minister with regard to item 409f.


Douglas Charles Abbott: Before my hon. friend does that, Mr. Chairman, what is the wish of the committee? Does the committee desire that we should pass the items en bloc or consider them item by item? When we come to the schedule in the bill, it is customary to pass tariff items item by item; but I am in the hands of the committee, and it is up to them to decide whatever they want to do. I do not imagine that most of the items have any special interest.


Edmund Davie Fulton: Item by item.


Mr. Knowles:: Agreed.


Douglas Charles Abbott: All right.


The Deputy Chairman:: I understand that the hon. member is asking a question in connection with item 409f?


Percy Ellis Wright: Yes.


Louis-René Beaudoin: Am I to understand that we are to call each tariff item?


Douglas Charles Abbott: After we have completed the general discussion, following the usual practice I thought we would run through the items, and then pass the resolution at the end.


Louis-René Beaudoin: Is that the wish of the committee?


Some hon. Members:: Agreed.


Wilbert Ross Thatcher: I have just one general question before you start to do that, Mr. Chairman. The minister answered the hon. member for Eglinton, as reported at page 2675 of Hansard, to the effect that he could not tell the exact amount of revenue that would be lost by these tariff decreases. I was just wondering if, in his budget speech, the fact that he has forecast revenue from customs duties next year of $315 million, the same as last year, means that there will be relatively no decrease in revenue.


Douglas Charles Abbott: I said I could not answer at that time. In the meantime I think we have obtained some information.


Wilbert Ross Thatcher: Will you give me that?


Douglas Charles Abbott: My parliamentary assistant will.


James Sinclair: The hon. member for Eglin-ton asked what effect the tariff changes proposed in this resolution would have on the revenue. It is a difficult thing to ascertain from existing records, because quite a few of

Customs Tariff
these items are listed out of what might be called basket items; for example, unfinished parts of mining machinery are. now to be found in one general item in which there are a great number of other types of equipment. When we remove it without a detailed examination of every invoice, it would be difficult to find the effect; and most of the effects are of that nature. But with the new plastic items,-there are many other reductions; there is one increase-the over-all effect is this. It is estimated, as closely as it can be estimated by the department, that there will be a reduction of not more than half a million dollars a year.


Mr. Shaw:: While we are dealing with the general item, there is a matter which I should like to bring to the minister's attention and certain information which I should like to procure. Within my constituency there is a dealer who handles American-made hearses and busses. Last month this man crossed into Canada at Windsor with a new hearse. He paid $1500 duty on the vehicle. He remained in London, Ontario, for a day or two and proceeded to Sarnia, there to cross into the United States. He was forced by the Canadian customs officials at that port to search out a bondsman and secure a bond guaranteeing that he would not sell that vehicle in the United States. In his communication to me he states that on ten previous occasions when he or his drivers had crossed in a similar manner, either going from east to west or from west to east, this situation had not occurred. It is conceivable that this matter has been straightened out. It has been indicated to me that he wrote to the deputy minister. I think that in view of the fact that this is the first time such a thing has occurred, and the further fact that he is a reputable dealer, the action was somewhat peculiar. I would ask for an explanation.


Douglas Charles Abbott: Inasmuch as it is a matter
relating to administration, I would ask the Minister of National Revenue to answer it, or to look into it.


Frederick Davis Shaw: It was taken up with the
deputy minister. I am not familiar with the explanation that has been given. Possibly I should be informed in the matter, but I have not been.


Mr. McCann:: I am not familiar with the
case, and would have to see the files before I could give an opinion. However, it appears to me somewhat unusual that a Canadian officer should concern himself with the disposition of the article in the United States. I think it will be found that there is some

slip-up somewhere, either in the information the hon. member has received or in the action of the officer.


Frederick Davis Shaw: He was the driver, himself.


Douglas Charles Abbott: The hearse was empty, I
suppose.


Frederick Davis Shaw: I imagine it was. Trying to
smuggle a body from this country to the United States would be difficult.


James Joseph McCann: It has been done before.
The Depuiy Chairman:	As the general
discussion seems to be complete, I shall call item 216f.
Item 216f agreed to.
Customs tariff-238. Synthetic resin sheets, film or sheeting, not less than 6 inches in width, n.o.p. synthetic resin lay-flat tubing not less than 6 inches in circumference, n.o.p.
(a)	Phenol-aldehyde type, not further manufactured than cast: British preferential tariff, free; most-favoured-nation tariff, free; general tariff, free.
(b)	Acrylic type, not further manufactured than moulded or cast: British preferential tariff, free; most-favoured-nation tariff, free; general tariff, free.
(c)	Polyethylene type
(i)	Plain, uncoated, undecorated: British preferential tariff, 10 per cent; most-favoured-nation tariff, 10 per cent; general tariff, 10 per cent,
(ii)	Other: general tariff, 15 per cent; mostfavoured-nation tariff, 15 per cent; general tariff, 15 per cent.
(d)	Vinyl type, except vinylidene,
(i)	Plain, uncoated, undecorated: British preferential tariff, 15 per cent; most-favoured-nation tariff, 15 per cent; general tariff, 15 per cent.
(ii)	Other: British preferential tariff, 15 per cent; most-favoured-nation tariff, 20 per cent; general tariff, 25 per cent.
(e)	Vinyl type, vinylidene,
(i)	Plain, uncoated, undecorated: British preferential tariff, free; most-favoured-nation tariff, free; general tariff, free.
(ii)	Other: British preferential tariff, free; mostfavoured-nation tariff, free; general tariff, free.
(f)	Other type
(i)	Plain, uncoated, undecorated: British preferential tariff, free; most-favoured-nation tariff, free; general tariff, free.
(ii)	Other: British preferential tariff, 10 per cent; most-favoured-nation tariff, 10 per cent; general tariff, 10 per cent.


James Sinclair: There is an amendment to
be offered to item 238. This is a new item covering plastics, and it is introduced as the result of two years of study by the tariff board. Since the resolutions have been printed, however, doubt has been expressed as to whether or not it was clear that this applies only to plastics made from resins, and not plastics made from cellulose. To make it clear that cellulose plastics still come under their old item, namely item 711, we are offering an addition to item 238, and I would ask my colleague to move the amendment accordingly.


James Joseph McCann: I move:
That tariff item 238 in the resolution of April 10. 1951, relating to schedule A of the customs tariff be amended by the addition of the following proviso:
"Provided that, for the purposes of this item, synthetic resin shall be deemed not to include cellulose derivatives,"


Edmund Davie Fulton: Why are the two types of plastics subject to different tariff items?


James Sinclair: I am informed there are a great many items in the tariff dealing with plastics in various groups. In its finding so far the tariff board has dealt only with plastics from resins, and that is what they have asked us to include in the item. Perhaps next year there will be another item bringing in a different terminology with respect to cellulose.


Edmund Davie Fulton: At the present time the cellulose plastics are under item 711. I understand that gradually they will be sorted out, and dealt with in particular?


James Sinclair: That is right.


[Stage Direction]
Amendment agreed to.
Stanley Howard Knowles: Is there not a typographical error here? I am looking at the resolution as it appears in Hansard of April 10 at page 1817. Should not the word "nor" be "not"?


James Joseph McCann: It is "not" in the resolution.


James Sinclair: In the resins resolution it is "not".


Douglas Charles Abbott: Unfortunately in Hansard of April 10 it is "nor".


Stanley Howard Knowles: But it should be "not".


Douglas Charles Abbott: Yes.


Louis-René Beaudoin: The word "not"
appears in the item.
Item as amended agreed to.
Customs tariff-277. Oils, hydrogenated, blown, dehydrated or sulphonated, not including blown or hydrogenated fish, seal or whale oils: British preferential tariff, 15 per cent; most-favourednation tariff. 20 per cent; general tariff, 25 per cent.


Percy Ellis Wright: There may be a simple explanation, but the rates in effect prior to the present suggested rate state that to August 27, 1950, the rate was 20 per cent, and from August 28, 1950, that it was "various". What is the meaning of "various"? In what conditions are the tariff rates varied?


James Sinclair: That applies to the item as it was before. It will be noted that in the proposed item we set out specific rates. The reason for this item arises from a tariff board ruling on August 27, 1950, disallowing the former distinction in that raw oils had different tariff rates from these hydrogenated,
Customs Tariff
dehydrated or sulphonated oils. Naturally we permit the entry of raw oils at a rate lower than the finished product, because we would hope that Canadian manufacturers would do the finishing. This item makes it clear that from April 11 these refined oils or partly processed oils, as described in item 277, shall have the tariff rates set out there, namely, a British preferential tariff rate of 15 per cent, a most-favoured-nation rate of 20 per cent, and a general tariff rate of 25 per cent. The old "various" rate varied according to the type of oil.


George Alexander Cruickshank: I have been interested in this matter. I see it is only ten minutes after five, and I shall not be engaged in anything until between eight and nine o'clock tomorrow night.


James MacKerras Macdonnell: Don't get
mixed up with the pipe lines.


An hon. Member:: Get going.


George Alexander Cruickshank: Oh, I am being told to hurry up. Some of these people are not interested in the 550,000 dairymen of Canada. However, I am trying to help the dairymen I represent. I shall just get on the record, if I can pronounce some of these words in item 277, just how these rates apply. It refers to "oils"-how do you pronounce that word; someone will have to help me there?


Douglas Charles Abbott: Hy-dro-gen-a-ted.


George Alexander Cruickshank: Yes, "Hydrogenated,
blown, dehydrated or sulphonated"-I was going to say suicided-"not including blown or hydrogenated fish, seal, or whale oils." Now, we will get the whole thing on the record so that the dairymen can read what we are discussing here. The first heading is, "British preferential tariff, 15 p.c."-and I hope Hansard gets it in that way. Then, the next column is "Most-favoured-nation tariff, 20 p.c." and the next-


Stanley Howard Knowles: Is that Progressive
Conservative?


George Alexander Cruickshank: Carrying on from there we get the general tariff at 25 p.c.-and I would like to have this printed in Hansard the way it reads in this delightful little document-"rates in effect prior to rates proposed in this budget:	British preferential tariff,
15 p.c."-and then under that the word "various". You know, these people who do not appreciate the dairy farmers are delighted to put the word "various" in there. It covers a multitude of sins. I believe Adam himself used it.
Then, we move along to the next column: "Most-favoured-nation tariff; to August 27th, 1950, 20 p.c.;" and then we have under that,

Customs Tariff
"From August 28th, 1950," and under that the word "various" again. Then, under the general tariff item there is, "25 p.c." and under that the word "various".
"Various", I suppose, refers to these oils which are coming into Canada in an endeavour to put the 550,000 dairymen out of action -as well as many creameries. From correspondence I have received from various ridings in Ontario and Quebec, I believe there are a few dairy farmers in those two provinces who are interested in dairying. Then, judging from editorials one sees in the Ottawa Journal, among other newspapers, it would seem that there are a few farmers in eastern Canada who are interested in the dairy industry-although surprisingly little is said in that connection. Still I must commend my good friend from Lanark who, in my opinion, made the best speech on behalf of the dairymen that has been made in this House of Commons in the last ten years.
Let me point out to the committee in connection with item 277 that in 1950 the amount of oils brought in per month amounted to 670,000 pounds. This year in the first quarter the importations amounted to 1,500,000 pounds per month. That is quite a large increase. Of course we hear these alibis when we talk about the high cost of living in connection with the price of butter, when it goes up a little, but when the cost of living goes down a small percentage we do not hear that the Canada Packers have decided to lower the price of butter they had in storage to the detriment of the people of Canada. You do not hear that advertised particularly.
I am not going through the list of these different oils. I am not a Rhodes scholar and there are a couple of words that I cannot pronounce, nor do I know what they mean. The item states, "not including blown or hydrogenated fish, seal or whale oils." I do not know what they mean by "blown".


Douglas Charles Abbott: I wonder if my hon. friend would permit me to interrupt for a moment. This item relates largely to non-edible oils, and the principal oil under it is castor oil which is brought in, not for medicinal purposes but for use in industrial processes, paints, textiles and the like. I am not a technician in connection with hydrogenated oils, but the fact is that this item maintains the existing tariff on these processed nonedible oils used for industrial purposes but excludes, as is stated, hydrogenated fish, seal or whale oils. The oils are, to a large extent, not fit for human consumption.


George Alexander Cruickshank: I thank the minister
for his description of the oils that are

customarily used in the manufacture of margarine, but I am afraid the Minister of Finance is not keeping up to date on what goes on in this city of Ottawa where they are trying to ruin the dairy farmers. As far as I am concerned, many of the things that I get go into my wastepaper basket, but here is one that I received which reads:
The Tariff Board Canada
Public sittings of the tariff board will be held at 541 Sussex street, Ottawa-
That is the street where you cannot make the left-hand turn.
-for the hearing of the undermentioned appeals under the Customs Act and the Excise Tax Act.
The first paragraph refers to an appeal in connection with logging companies. I need not say anything about that as there are a few representatives around here to protect the logging interests. But I could speak for them because we log 282 million feet annually in my riding, and the logs are of such a size that it takes four men and a boy to jump over them. But they are being well looked after.
The next paragraph in this notice refers to an appeal by Canada Packers Limited. I am certainly going to attend that one. I have heard of divorce courts and appeal courts, but I understand at this hearing I will not be able to say anything. The member for Fraser Valley will not be able to get up and say a word about the dairy farmers. The paragraph reads:
Wednesday, June 13, at 10 a.m. (D.S.T.)
That means daylight saving time.
Appeal No. 236 by Canada Packers Limited-
The parliamentary rules do not permit me to say just what they are limited in.
[DOT]-from a decision of the deputy minister of national revenue that a mixture of hydrogenated cottonseed oil (80 per cent) and hydrogenated soya bean oil (20 per cent) imported under Winnipeg entry No. 35785-A, December 8, 1949; West Toronto entry No. 29251, November 16, 1949 and Vancouver entry No. 49605-A, February 16, 1950, from the United States in tank cars for the manufacture of margarine is dutiable under tariff item 711 at 20 per cent.
I cannot help but think of the $3.86 I have to pay for a hundred of these little pills, and yet here is a case where they are bringing in these oils in tank cars. That is what is being done by this colossal giant which is trying to ruin the dairy farmers. Yet they have the audacity to appeal and waste the time and money of the people of Canada by taking up the time of this board. This could be decided in room 565 without any delay at all.

I do not know where else I could bring up this matter. The two words are alike and I think the two oils are alike. The appeal is in connection with cottonseed oil.


Douglas Charles Abbott: The hon. member could speak to it under tariff item No. 711.


Stanley Howard Knowles: Item 711 is not in here.


George Alexander Cruickshank: I knew there would be
a joker somewhere when I am trying to protect the dairy farmer. If I moved an amendment I would be ruled out of order. It is seldom that I ask Hansard to be put away and preserved in family archives but I hope that the dairy farmers in Ontario and Quebec who happen to get Hansard in their homes will put it away and then five years from now read what I have said about these imported oils and the like and then consider the returns they are getting from their dairying at that time.
I wish I could move an amendment, but as I cannot I have taken advantage of the only opportunity I have to bring this matter before the committee. The fact that last year the importations amounted to 670,000 pounds per month as compared with 1,500,000 pounds a month this year shows what is happening. I understand from the minister that they are taking some impure articles out of it to put directly into margarine and they are putting it into cod liver oil or something.
I do not want to take up any more time of the committee. I should like to move an amendment because it would be quite simple. I would go right across the board, 15 per cent, 20 per cent, 25 per cent, 15 per cent, 20 per cent, 25 per cent and make it quite simple for those people who make so many mistakes down here. They should go to the Fisher high school and get somebody to teach them how to multiply because I would suggest that all rates be multiplied by three. We would then have a proper tariff on imported oils which are. now being brought in in an attempt to ruin the dairy farmer.


Edmund Davie Fulton: The minister stated that the
tariff was changed on August 27, 1950; that prior to August 27 there had been a uniform rate and that after August 27 there were various rates made applicable under the most favoured nation tariff. I do not recollect that the house was in session on August 27 and perhaps the minister could explain how this happened.


Douglas Charles Abbott: On August 27 last the tariff board on an appeal from one of the paint companies stated that dehydrated castor oil was not properly included under item 711. This particular item, castor oil, forms an important part of our trade agreement with
Customs Tariff
Brazil. It was always intended that the raw product would come in free of duty. It was never intended that the processed product should come in free of duty. In virtue of the decision of the tariff board, however, it became necessary to insert this item in the tariff to make it perfectly clear that raw castor oil comes in free but that if it is dehydrated, hydrogenated, or whatever other processes are mentioned here, the existing tariff rates will apply, and that is all.


Edmund Davie Fulton: How would it be that the item was inserted in the tariff? I can understand that the decision would make inapplicable the rate which had previously been thought to be applicable, but the minister says that the item was inserted in the tariff. My understanding was that could only be done as a result of a resolution.


Douglas Charles Abbott: We are inserting item 277 as a new item in the tariff, and have carved it out of item 711.


Edmund Davie Fulton: This change is not now in effect, and will only be in effect, and dated back to August 27, after this is passed?


Douglas Charles Abbott: It has been effective since budget night. Between the 28th of August and the night I announced my budget changes, various rates, as indicated in the three columns to the right, were in effect, but from budget night, assuming that this act passes, this new item will apply.


Mr. Hatfield:: The minister says that this item does not cover edible oils. What oils does it cover?


Douglas Charles Abbott: It largely covers inedible oils.


Heber Harold Hatfield: What do you mean by that?


Douglas Charles Abbott: Just what the item says. These oils are, to a very large extent, not for edible purposes, and my hon. friend will note that fish, seal or whale oils are specifically excluded. I should like my hon. friend to take my assurance, which is based upon the positive assurance of the officials who know, that this item does not, in practice, cover edible oils to any great extent.


George Alexander Cruickshank: I should like to ask a question. Is castor oil not edible?


Douglas Charles Abbott: Not in this form. It may be edible in its raw state. I do not know.


George Alexander Cruickshank: I do not think we should pass something concerning oil when nobody knows what it is and what it is not. Just before I came in a member of this house told me that they have to import oil to put up herring of all things. We do not have that problem in the province of British Columbia.

Customs Tariff
Out there herring have oil in them. An hon. member told me that right behind these curtains.


Stanley Howard Knowles: That makes it official.


George Alexander Cruickshank: I want to know what these oils are. The minister said they are going into castor oil. If they are going into castor oil they must be edible.


Douglas Charles Abbott: No. I am informed that the basic product of most of these oils is castor
oil.	Castor oil is brought in in its raw state. I understand that it may then be processed for medicinal purposes or for industrial purposes. It is used in paint, certain textile processes, tanning, and so on. I am not a technical expert with respect to other oils, but what is being done here is not to change the existing duties at all but to maintain the free entry of the raw oil. There are several items for all other oils such as cottonseed oil. There is item 711. There are numerous oil items in the tariff.


Heber Harold Hatfield: I should like to ask the
minister what the duty is on edible oil such as cottonseed and peanut oil.


Douglas Charles Abbott: My parliamentary assistant has the figures.


James Sinclair: 
Andrew Wesley Stuart: There has been some reference by the hon. member for Fraser Valley to edible oil being used in the sardine industry. I can assure the hon. member that hundreds of thousands of gallons are used each year in the sardine industry in the maritime provinces. I am not aware whether or not it is used in British Columbia. At the present time that oil is being imported from the United States. There was a time when we got quite a bit of cottonseed oil from Great Britain, but today it is coming in from the United States. It is brought in in tank car lots, and there are hundreds of thousands of gallons used every year.


George Alexander Cruickshank: I am still glad we have better fish in British Columbia.


[Stage Direction]
Item agreed to.

Items 296e, 386, and 403 agreed to.
Customs tariff-409f. Grain crushers: grain or hay grinders; grain or hay dryers: milk coolers; steel stanchions for confining livestock either in pens or individually, including complete equipment for milking parlors; automatic stock watering howls; barn litter carriers and track; sprinkler irrigation systems; barn hay forks, carriage, pulleys and track; all the foregoing for use on the farm for farm purposes only; hay loaders, hay tedders, potato planters, potato diggers, fodder or feed cutters, ensilage cutters, post hole diggers, snaths, stumping machines, grain loaders or elevators with a capacity not exceeding 40 bushels per minute and all other agricultural implements or agricultural machinery, n.o.p., and complete parts of all the foregoing.
Percy Ellis Wright: This item deals with certain types of agricultural machinery or equipment which are now being classified as agricultural machinery and consequently will come in free. It sets out here that among other things there is included equipment for milking parlours. Would that include the stationary gasoline engine which is a part of the equipment in a milking parlour where power is not available?' The item also refers to grain loaders or elevators with a capacity not exceeding 40 bushels per minute. Those grain elevators will only operate if there is a gasoline engine attached to them. Will gasoline engines that are attached to such grain loaders come in free of duty?


James Sinclair: Regarding separate or attached gasoline engines, the answer is, generally, no. However, attached gasoline engines meeting the provisions of tariff item 409q are free of tariff.


Percy Ellis Wright: Then I must ask the further question why they are not included. These small portable gasoline engines are pieces of farm equipment which are used on at least ninety per cent of the farms of western Canada. They are essential to the operation of the equipment which you are now placing on the free list. I would urge the minister to give serious consideration to the placing of such engines on the free list especially if they are brought in as part of such equipment, where they are attached to part of the equipment and form a part of it.


Douglas Charles Abbott: My hon. friend is aware that the question of the tariff on gasoline engines is one of long standing. They are covered by a number of items in the tariff, and as my parliamentary assistant has said those items do not provide for the free entry of gasoline engines although they may be used as part of these milking parlours, unless, of course, the provisions of tariff item 409q are complied with. As to what may be done another year of course I am not in a position to say. I will be glad to take my hon. friend's representations under consideration.


Percy Ellis Wright: I may say that this matter was brought to the minister's attention two years ago, I believe. I am wondering if any consideration has been given to it, and what the result of that consideration is. These engines are an important part of farm equipment today. We are not living back in the days of the ox cart when everything was done by hand. Today on our farms, especially on those farms which are not equipped with electricity, people have to use these small gas engines for a great many purposes. I think they should be classified as a piece of farm equipment. I would certainly urge the minister to give consideration to this matter.


Edmund Davie Fulton: For the benefit of myself at any rate, and possibly one or two other western members in whose constituencies there are dairies and dairy farms, I wonder if somebody would tell me what a milking parlour is. Out there our cows are not so delicate that they have to be brought into the parlour for milking. I do not know what a milking parlour means.


James Sinclair: I must confess that I felt the same surprise when I first saw the item. Apparently this is a phrase commonly used for the complete room and equipment used in the operation of mechanical milking. It is a trade name, a phrase used in the industry.


Edmund Davie Fulton: I suppose purebred cows
would not like to have their milk taken in anything but a parlour.


Mr. Major:: If the hon. member would go out through the country once in a while he would see what these milking parlours are.


Edmund Davie Fulton: In my part of the country cows are milked in a milk room, not a milk parlour.


Mr. Cardiff:: For the benefit of those who do not know anything about a milking parlour, we have them on the more up to date farms in our part of the country. It is a room especially equipped, with everything nice and clean. The cow is cleaned before being brought in, and instead of being milked in her usual stall she is brought into this milking parlour. The machine is turned on, and after she is milked she is driven out and another cow is brought in. Anyone who has the opportunity to go into a modern dairy barn will find one of these rooms, right up to date and very clean.


Harry Oliver White: Once before I asked a question on 409f. I understand that all the articles under this item come in duty free.


Douglas Charles Abbott: That is right.
Customs Tariff


Mr. Hunter:: Can the minister say what the rates were on the various items now being brought in free?


James Sinclair: There were varying rates of duty applying to the different articles which are now being included under this item. The hon. member can find what they were by looking up the customs tariff. However, no matter what the previous rate was they are all free now.


[Stage Direction]
Item agreed to.
Items 410a, 410g, and 410h agreed to.
410i. (1) Miners' rescue appliances, designed for emergency use in mines, where artificial breathing is necessary in the presence of poisonous gases, including high pressure oxygen pumps for use exclusively in connection with such appliances, and automatic resuscitation apparatus for artificial breathing to aid in the saving of human life, and parts of all the foregoing.
(2) Combustible gas indicators, for detecting explosive gases or vapours; methane detectors, carbon monoxide detectors and continuous indicators and recorders; carbon monoxide alarms; pyrotannic detectors for determining the presence and quantity of carbon monoxide in the blood; inhalators for use in reviving victims of carbon monoxide poisoning; pocket gas respirators, dust respirators, paint and lacquer spray respirators, fume and smoke masks, and hose mask outfits complete with face piece, harness, air line and air pump or blower, designated for the protection of firemen and industrial workers; special safety goggles, designed for eye protection of miners, welders, foundrymen and other industrial workers employed in hazardous work; parts of all the foregoing, British preferential tariff, free; most-favoured-nation tariff, free; general tariff, free.
Stanley Howard Knowles: May I ask the minister for a further word of explanation about this word "various"? He gave an explanation before, but it left one or two questions still in my mind. Does it ever happen that the tariff board or the government fixes rates, various or otherwise, higher than the rates that have been approved by parliament?


Douglas Charles Abbott: No; the executive cannot increase a rate approved by parliament. Subject to the provisions of the Customs Act it can reduce rates under certain conditions, but rt cannot increase them. When the word "various" is used in the ways and means resolutions it usually indicates that where a number of items are put on the free list and included in a general item you do not attempt to indicate what the different rates may have been on the various articles. To answer my hon. friend's question directly, there can be no increase of a tariff by executive action.


Stanley Howard Knowles: I notice also that while the word "various" appears quite a number of times, it seems to appear only in the columns under the heading "rates in effect prior to rates proposed in this budget." Am I right in assuming that we never legislate for various rates?

Customs Tariff


Douglas Charles Abbott: No.


Stanley Howard Knowles: In other words, the word "various" never appears in the column which indicates the new rates being brought into effect?


Douglas Charles Abbott: My hon. friend is quite right.


James Sinclair: The only change in items
410g to 410z is the phrase about parts. Now unfinished parts may also be brought in free and finished in the mine machine shop itself. That is the effect of 410g to 410z, with the single exception of 4101 dealing with coal crushers. One of the reasons for the various rates was that forgings and castings had different rates before. Now unfinished forgings and castings together with parts for mining machinery are going to be dutiable at the same rate as the machinery itself.


[Stage Direction]
Item agreed to.
Items 410j, 4101, 410o, 410ip, 410q, 410r, 410s, 410t, 410u, 410v, 410w, 410x and 410z agreed to.
435. (a) Locomotives and motor cars for railways, of a class or kind not made in Canada, and parts thereof (including motive power and parts thereof, of a class or kind not made in Canada), for use exclusively in mining, metallurgical or sawmill operations, free.
(b)	Diesel switching locomotives, including motive power, and parts of the foregoing, of a class or kind not made in Canada, free.
George Alexander Cruickshank: Would it be possible
to discuss fire equipment under this item?


James Sinclair: This is not the item.


George Alexander Cruickshank: Is there such an item?


James Sinclair: Not in this amendment.


[Stage Direction]
Item agreed to.
440k (1) Engines and complete parts thereof, n.o.p., to be used exclusively in the propulsion of boats or in hoisting nets and lines used in such boats bona fide owned by individual fishermen for their own use in the fisheries, under such regulations as the minister may prescribe, free.
(2) Diesel engines and complete parts thereof, to be used exclusively in the propulsion of boats or in hoisting nets and lines used in such boats for use exclusively in bona fide commercial fishing operations, under such regulations as the minister may prescribe, free.
Percy Ellis Wright: Are these rates changed or
reduced from what they were before, when these engines are used in fishing boats?


James Sinclair: The only change in this
section is that now we admit diesel engines free if they are going to be used in fishing boats. We still tax gasoline engines, but we admit diesel engines free. That is the intent of the change in 440k.


Edmund Davie Fulton: Under the general tariff they
are to be subject to a duty of 15 per cent, are they not?
[Mr. Knowles.1


James Sinclair: Yes, I am sorry. They are
free under the British preferential tariff and the most favoured nation tariff, and the two sources from which we obtain these engines are Britain and the United States.


Heber Harold Hatfield: Why are diesel engines free
when used in fishing boats but not free when used in agricultural machinery when they are part of that equipment? I am not objecting to their being free for use in fishing boats, but I want to know why they are not also free when used in agricultural equipment.


James Sinclair: Under item 409q diesel
engines for agricultural equipment are now free. That item reads:
Auxiliary internal combustion engines incorporated in or attached to agricultural implements or agricultural machinery: free, free, free.
This is just bringing the fishing industry in line with the exemption given to agriculture.


Percy Ellis Wright: Why are diesel engines
allowed in free while the tariff is maintained on gasoline engines? The gasoline engine is used more than the diesel engine.


James Sinclair: I cannot speak of the east
coast, but on the west coast they are turning mere and more to diesel engines for their fishing boats. That is a much more expensive engine to purchase initially, but of course it has a much lower cost of operation. I think this is a step forward. Diesel engines for the fishing industry are now free, as they have been for agriculture. The time may come when further consideration may be given other engines, but at the moment the fishing industry is very grateful for the opportunity to bring in these diesel engines free from Britain or the United States.


Percy Ellis Wright: I quite agree with that; but
are any of these engines made in Canada?


James Sinclair: Some small diesel engines
are made in Canada, but they have been used only to a very limited extent in the fishing industry. Big diesels are made here for use in power plants, but of course that is a different engine. The diesel used in a fishing boat of course is not comparable to the one used in a power plant.


Percy Ellis Wright: I point out that you are prepared to bring in diesel engines free, though they are made in Canada, while apparently you are not prepared to bring in gasoline engines free. Have the gasoline engine manufacturers some special reasons for this?


James Sinclair: There is one important point. In order to have a ruling like this there has to be a sufficient production within the country to satisfy normal demands. That is

certainly not the case with diesel engines for the fishing industry. On the other hand, as the hon. member knows, we have a very large manufacture of gasoline engines in most of the provinces of Canada.


Mr.   Baler@: May I ask if the recent Torquay agreements make any changes in these tariffs.


Douglas Charles Abbott: No. That question was asked the other evening, and I explained that the Torquay agreements do not relate to these changes at all. It was for that reason the motion was placed on the order paper in the name of the Prime Minister to refer the Torquay agreements to the banking and commerce committee, and I hope we will discuss that matter on Monday. A discussion of the Torquay agreements is not relevant to these items, because none of them tie into those agreements.


Andrew Wesley Stuart: I would like to congratulate the minister on having the duty removed from diesel engines. That is something which is very much appreciated in the maritime provinces, owing to the fact that 90 per cent of the diesel engines used down there are imported from the United States. It is considered that the type of engine made in Canada is not of the same quality as the United States engine. This is something the fishermen have been asking for years, and I congratulate the minister on having brought it about.


George Alexander Cruickshank: I would like to join with my hon. friend, and to add the hope that the maritimes will adopt the same spirit in connection with the dairy industry.


Percy Ellis Wright: I want to say one more word about these gasoline engines. We have manufacturers in this country, the Massey-Harris and the International Company, who are manufacturing these engines in the United States. They are sending them in here, and we are paying a tariff on them. Why can these engines not be made in Canada at lower prices so we can afford to buy them?
I They are being sold in the United States at prices which are twenty-five per cent lower than we have to pay for them in Canada. It seems to me there is something wrong. We have been bringing this to the attention of the minister year after year. If these tariffs were taken off these companies would manufacture in Canada, and we would have a Canadian industry. Why should we pay to bring them in?


Douglas Charles Abbott: As I said before, this is an old subject and we have discussed it at length in the house before. It may be that gasoline engines should be put on the free list. I think that you would find in a good many parts of Canada a good many people might
Customs Tariff
object to that. Be that as it may, the government has not yet decided it is appropriate to do so. Broadly speaking, our tariff is very much lower than the United States tariff. I have had occasion to say before in this house that unless I am convinced it is clearly in the interests of the Canadian people, we do not give away any tariff concessions unless we are getting something in return. Once you have given a concession you find that your bargaining position is pretty low'.
The record of the party of which I am a member has been one, over the years, of consistently lowering tariffs. I do not think any party in this country can show a better record. But I am not prepared to go into a long discussion now on the merits or demerits of taking the tariff off gasoline engines. It is not being taken off in this budget.


Major James William Coldwell: Mr. Chairman, we appreciate the tariff reductions that have been made, but what the minister has said is reminiscent of the brick for brick policy that I heard the Liberal party criticize so strongly from 1930 to 1935 when they were in opposition. It seems to me it is a big departure from the old tariff discussions we used to have on the prairies when most of the elections were fought on tariff issues. After all, these engines are used very extensively by the farm population of this country, and by others as well. I believe the plea that has been made is one that should receive consideration, and I hope the minister will consider it in spite of the fact he believes in an eye for an eye and a tooth for a tooth tariff policy.


Douglas Charles Abbott: Under item 409q gasoline engines are brought in free under certain circumstances if they are for farmers. To answer my friend's general observation about the brick for brick policy, I think he will be fair enough to recognize that we have been taking down the bricks in our tariff structure faster than other people have been taking them down. The brick for brick policy was a building up, and we have been lowering our tariffs unilaterally-


James MacKerras Macdonnell: What about 1930?


Douglas Charles Abbott: Well, 1930 was-


James MacKerras Macdonnell: Will the minister say that about 1930?


Louis-René Beaudoin: Order.


Douglas Charles Abbott: In 1932, there were some things done which would not apply to that. Let me suggest that the brick for brick argument does not apply to what I have been discussing now.

Customs Tariff


Mr. McLure:: A few moments ago I understood the minister to say that they never gave any tariff concession unless they got some return-


Douglas Charles Abbott: No, I said unless I was convinced it was in the interests of the Canadian public to do it without a quid pro quo.


Winfield Chester Scott McLure: I was going to say that there was one item, furs which are allowed free entry, and yet the United States put on a 50 per cent ad valorem duty.


[Stage Direction]
Item agreed to.
Items 475, 523g and 682 agreed to.
Customs tariff-705. Settlers' effects, viz: Wearing apparel, books, usual and reasonable household furniture and other household effects; instruments and tools of trade, occupation or employment, guns, musical instruments, domestic sewing machines, typewriters, bicycles, carts, wagons and other highway vehicles, agricultural implements and livestock for the farm, not to include livestock or articles for sale, or for use as a contractor's outfit, nor vehicles nor implements moved by mechanical power, nor machinery for use in any manufacturing establishment; all the foregoing if actually owned abroad by the settler for at least six months before his removal to Canada, and subject to regulations prescribed by the minister, British preferential tariff, free; most favoured nation tariif, free; general tariff, free.
Provided:
fl) That, subject to the exceptions stated hereunder, any dutiable article entered as settlers' effects may not be so entered unless brought by the settler on his first arrival, and shall not be sold or otherwise disposed of without payment of duty until after twelve months' actual use in Canada;
(2)	That the six months' ownership requirement as specified in this item shall not apply in the case of bona fide brides' trousseaux and wedding presents; and
(3)	That with respect to bona fide settlers' effects imported from countries named by the minister that are applying restrictions on the transfer of emigrants' capital to Canada, the six months' ownership requirement specified in this item shall not apply and notwithstanding the first arrival requirements specified in this item a reasonable amount of the effects of a settler may be entered from such countries during a period of three years from the date of the settler's first arrival, subject to such regulations as the minister may prescribe.
James Sinclair: I have a small amendment to this item 705. The first part is exactly the same, but the change is in section (3). The purpose of this amendment is to extend the provisions which allow a settler to bring his effects into the country when he comes here. When countries began putting up barriers so far as the movement of capital was concerned, it became very difficult for settlers from these countries to bring in very much by way of personal effects, which is the reason for this amendment. The section which we have here provided that settlers from countries where there were restrictions, which were going to be designated by the governor in council, could bring in equipment which they
IMr. Abbott.]
had, and they did not have to have it for six months as have other settlers. More than that, they could continue to bring in equipment for the next three years. Some of these countries allow one to bring out so much every year.
This provision has the added advantage of allowing the settler in Canada to look around and see what sort of equipment he should bring here. It was pointed out that this three-year rule would be rather unfair to those immigrants who came out in 1945, 1946 and 1947, who would not get any benefit from it. So, the purpose of this amendment is to carry out the three-year thought so far as settlers coming in the future are concerned, and at the same time give those who came in the past one year in which to bring in their effects. So far only Holland has agreed to such a plan, and it will be of great help in bringing out more Dutch immigrants.


James Joseph McCann: I move that the third section of the proviso to tariff item 705 in the resolution of April 10, 1951, relating to schedule A of the customs tariff be amended to read as follows:
(3) That with respect to bona fide settlers' effects imported from countries named by the minister that are applying restrictions on the transfer of emigrants' capital to Canada, the six months' ownership requirement specified in this item shall not apply and notwithstanding the first arrival requirements specified in this item a reasonable amount of the effects of a settler may be entered from such countries under this item
(a)	during a period of three years from the date of the settler's first arrival, or
(b)	where the settler's first arrival occurred between April 10, 1945, and April 11, 1949, during the period ending April 10, 1952,
subject to such regulations as the minister may prescribe.


Louis-René Beaudoin: Shall the item
carry?


George Alexander Cruickshank: Does that rule out
section 2 of item 705?


Douglas Charles Abbott: No, it revises section 3.


George Alexander Cruickshank: Section 2 has not carried as yet, and; I should1 like an explanation of section 2 of item 705.


James Sinclair: In countries where there is no restriction on capital, a settler is expected to have owned his effects for six months before bringing them into this country. Obviously a bride could not be expected to own her trousseau for six months. There is no change in this provision. The only change is to the subsection in which we are applying a different procedure to those countries which have exchange restrictions.


George Alexander Cruickshank: I was asking for an
explanation of what that consisted of, and I thought the parliamentary assistant could tell me.


Lewis Elston Cardiff: How much are they allowed to bring in?


James Sinclair: That is for the country of origin to say. They are the ones who put on the restrictions. We have no limit to our settlers' effects so long as they come within the type described in the old section 705. The Netherlands are being fairly generous over the three-year period in permitting Dutch immigrants to bring goods forward without restriction. The country of origin puts on the restrictions.


Mr. Adamson:: Did I understand the
minister to say that only the Netherlands have agreed to this, and the United Kingdom has not agreed?


James Sinclair: So far the agreement is only with the Netherlands. It can be expected to cover any of those restricted countries where there is an agreement.


Agar Rodney Adamson: Where there is currency
control?


James Sinclair: Yes.


Lewis Elston Cardiff: This has to do with material, but what about money?


James Sinclair: That again is not a restriction of ours but of the country of origin.


[Stage Direction]
Amendment agreed to.
Item as amended agreed to.
Customs tariff-708. Arms, military stores, munitions of war and other goods the property of and to remain the property of a British commonwealth country designated by the governor in council or of a foreign country that is a party to the North Atlantic treaty and is designated by the governor in council; goods consigned to military service agencies and institutions designated by the governor in council where the goods are for the personal use of or consumption by nationals of countries designated under this item who are employed in defence establishments of those countries in Canada: British preferential tariff, free; most-favoured-nation tariff, free; general tariff, free.
Provided that the governor in council may prescribe regulations for all the foregoing and may order that any of the privileges granted under this item be withdrawn in any case where a country does not grant corresponding privileges to Canada.
James MacKerras Macdonnell: I want to
ask a question under item 708. I read this near the end of the paragraph:
. . . goods consigned to military service agencies and institutions designated by the governor in council where the goods are for the personal use of or consumption by nationals of countries designated under this item who are employed in defence establishments of those countries in Canada.
Customs Tariff
Does that mean all kinds of personal goods without limitation? In other words, as I understand the privilege of diplomatists, it treats them practically like diplomats.


Douglas Charles Abbott: I am informed, for instance, that this would include goods sold through what are described as American PX stores at an American base at, say Churchill, or at some of the bases in Newfoundland. This section was inserted at the suggestion of the Department of National Defence primarily. My understanding is that it was to facilitate the transfer of arms and equipment between the countries with which we are associated in the North Atlantic treaty.


James MacKerras Macdonnell: Is the
minister satisfied that it is administratively watertight and that it will be limited in the way that he indicates? Suppose that we get in the country large numbers of people like those described in this section, and you found you would open the door much wider?


Douglas Charles Abbott: As to that, of course, it will be administered by the deputy minister of national revenue, customs and excise, Mr. Sim. The wording which is used here is the wording which he in fact prepared; and he assured us that he could administer it. In part, of course, it is to eliminate obsolete phraseology in a similar item going back to 1906, which refers to such things as the imperial government, His Majesty's imperial navy, and so on. But it is intended to broaden the application to our allies in the North Atlantic treaty.


James MacKerras Macdonnell: Have we in fact had some similar arrangement, either during the wartime or otherwise, and has it worked out satisfactorily?


Douglas Charles Abbott: We have had it in respect of the United Kingdom, but we have never had it with respect to other countries with whom we have been allies.


[Stage Direction]
Item agreed to.
Resolutions 2 and 3 agreed to.
Louis-René Beaudoin: Shall I report the resolutions?


Some hon- Members:: Agreed.


Douglas Charles Abbott: Call it six o'clock. Perhaps in the five minutes that remain I might introduce the bill based on this resolution. Would that be appropriate?


Louis-René Beaudoin: Perhaps I should remind the minister that we have the income tax resolution to consider. They have all been moved into committee of ways and means at the same time.


Douglas Charles Abbott: They are all before the
committee.

Income Tax Act
The Depuly Chairman: I should not have said just now: "Shall I report this resolution?" We still have this income tax resolution to consider.


Douglas Charles Abbott: I think that is correct. It might be well for me to introduce all the bills at the same time. Then of course my intention would be to allow them to stand on the order paper for several days in order to enable hon. members to study them, particularly the one with regard to income tax.


Louis-René Beaudoin: Then at this time I will call the income tax act resolution.


INCOME TAX ACT
[Stage Direction]
That it is expedient to introduce a measure to amend the Income Tax Act and to provide, amongst other things:
1.	That, in respect of income earned after the commencement of the 1951 calendar year, a corporation shall pay a defence surtax for the year equal to 20 per cent of that portion of its ordinary income tax for the year that is computed at the 38 per cent rate, or the 33 per cent rate if applicable (before allowance is made for tax credits), subject to a right to a refund of such tax to the extent that it would reduce the corporation's taxable income after payment of ordinary income tax to an amount less than 5 per cent of its capital employed.
2.	That an individual shall pay a defence surtax equal to
(a)	for the 1951 taxation year, 10 per cent and
(b)	for each subsequent taxation year, 20 per cent of his ordinary income tax (including investment surtax) for the year before allowance is made for tax credits.
3.	That, for the purpose of computing income from an office or employment for the 1951 or a subsequent taxation year, there may be deducted certain amounts paid in respect of
(a)	travelling expenses that the officer or employee was required by the contract of employment to incur,
(b)	professional membership dues where the officer or employee was required by the contract of employment to maintain his professional status,
(c)	office rent or salary to an assistant or substitute required by the contract of employment to be paid by the officer or employee,
(d)	supplies consumed directly in the course of the employment for which the officer or employee was required by the contract of employment to pav, or
(e)	union dues.
4.	That the governor in council be authorized to make regulations under which the income tax of members of the armed forces on their service income will be paid in full in respect of the pay and allowances of each pay period by a deduction therefrom in accordance with a special table subject to the right of any member to file a return on an annual basis.
5.	That the right to elect to pay the 15 per cent tax on its undistributed income now enjoyed by a private company
(a)	be extended to all other corporations, and
(b)	be withdrawn, effective April 10, 1951, from a corporation that is controlled by another corporation except in respect of its undistributed income on hand at the end of the 1949 taxation year.

6.	That for the 1951 and subsequent taxation years the provision under which the 15 per cent tax rate on the first $10,000 of income of a corporation applies to only one of several related corporations be amended so as not to include In the class of related corporations those controlled by persons not dealing at arms length unless such persons own shares in the capital stock of both corporations.
7.	That for the 1951 and subsequent taxation years, payments made for insulin, cortisone, adrenocortico-trophin (ACTH), liver extract injectible for pernicious anaemia and vitamin B12 for pernicious anaemia purchased under a physician's prescription may be included in the medical expenses for which a deduction from income may be made for the purpose of computing taxable income.
8.	That special deductions from income to taxpayers whose principal business is the production, refining or marketing of petroleum or petroleum products or the exploring or drilling for oil or natural gas or mining or exploring for minerals, be allowed for expenses incurred in the 1954 operations on the same basis as for expenses incurred in the operations in the years 1951 to 1953.
9.	That special deductions from income and taxes to taxpayers whose principal business is production, refining or marketing of petroleum or drilling for petroleum be allowed for expenses incurred in respect of deep-test oil wells in 1952 operations on the same basis as for similar expenses in 1950 and 1951 operations.
10.	That the exemption of the income from a metalliferous or industrial mineral mine for the first three years of production now applicable to mines that came into production during the years 1946 to 1952 be extended to mines coming into production in the years 1953 and 1954.
Louis-René Beaudoin: Perhaps we could agree on the procedure to be followed. Is it the intention to call these clauses separately?


Douglas Charles Abbott: I would not have the slightest objection, speaking for myself, to adopting the suggestion which was made the other night by the hon. member for Winnipeg North Centre, I think it was, namely that we should consider the various paragraphs of the income tax resolution, paragraph by paragraph, subject of course to the right of any hon, , member of the committee who wishes to go I back to one of the items in order to get information about the corporation tax, union dues or whatever it may be; and when that procedure has been completed, that we should adopt the resolution as a whole. It would, of course, be open at any time during that procedure for amendments to be moved to the resolution, if those amendments were otherwise in order.


Louis-René Beaudoin: Is the procedure outlined by the minister agreed to?


James MacKerras Macdonnell: I want to raise one other point which might be disposed of now; it will not take half a minute. My understanding is that at the time of second reading of the income tax bill, it will be open to have a discussion of the references

in the budget to changes in the depreciation provisions, and that we may discuss them then and on item No. 1 of the income tax bill.


Douglas Charles Abbott: I think that would probably be the most convenient way of doing it. There is nothing in the income tax resolution dealing with it, but I agree that an opportunity should be afforded for discussing it. Probably it would be better to discuss it in committee where questions could be asked. It is open to any hon. member to make a speech about it on second reading; but perhaps on the title of the bill to amend the Income Tax Act we might agree that those who wish to discuss the new depreciation regulations, if there is no other appropriate section, should do so on section 1.


James MacKerras Macdonnell: Will there be provision in the income tax bill or elsewhere giving effect to this, or is it proposed to give effect to it purely by regulation?


Douglas Charles Abbott: No. There is an appropriate section in the income tax bill, so that there will be ample opportunity to discuss it.


Some hon. Members:: Six o'clock.


Louis-René Beaudoin: Is the procedure outlined by the minister agreed on?


Some hon. Members:: Agreed.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at eight o'colck.
Louis-René Beaudoin: When business was interrupted at six o'clock we were considering the first clause in the resolution.
1. That in respect of income earned after the commencement of the 1951 calendar year, a corporation shall pay a defence surtax for the year equal to 20 per cent of that portion of its ordinary income tax for the year that is computed at the 38 per cent rate, or the 33 per cent rate if applicable (before allowance is made for tax credits) subject to a right to a refund of such tax to the extent that it would reduce the corporation's taxable income after payment of ordinary income tax to an amount less than 5 per cent of its capital employed.


James MacKerras Macdonnell: Mr. Chairman, I have some questions to ask with regard to the first paragraph. First of all I would draw attention to the retroactive feature set out in the first line, where it uses the words, "in respect of income earned after the commencement of the 1951 calendar year." It is pointed out, and I think with some cogency, that that retroactive feature will work an inconvenience, and perhaps sometimes a hardship, on a company the fiscal year of which ended during
Income Tax Act
these first months before the budget was presented, and which may have completed all its arrangements and may now be seriously embarrassed by finding out that it is subject to a tax about which it knew nothing when it brought its financial year to a close.


Douglas Charles Abbott: As my hon. friend knows, the higher tax will apply only to the months after January 1, 1951. I understand that, to that extent, there is a retroactive feature to the proposal which might cause some embarrassment. But in any case it was felt that in the circumstances the proposal was not unfair.


James MacKerras Macdonnell: Well, I
must say the minister is treating it lightly. I do not know what precedents there are for this procedure; but surely to face companies that have already made their disposition with a tax about which they knew nothing, is something which is not only unprecedented, or for which there is very little precedence, but which is also unfair. Actually, is the amount involved so great and the matter so important to the exchequer that it must inflict this hardship upon individual corporations which, after all, are being heavily taxed?


Douglas Charles Abbott: I do not know how great the
hardship may be, but I do not think it would be very great. There is plenty of precedent for it. In many years in the past increases in taxes have been made applicable to all companies whose fiscal periods ended after a certain date. In this case the increased tax will apply only to such portion of the fiscal period as accrues after January 1, 1951. Notice of this 20 per cent surcharge was given on April 10. I do not think the provision is inequitable.


Mrs. Fairclough:: Is it intended that this
tax shall be calculated and paid without regard to the right to refund? That is, does the company remit the tax and then later claim a refund on the amount it has paid in excess of the 5 per cent?


Douglas Charles Abbott: The hon. member is correct.
The tax, including the 20 per cent surcharge, is paid. Then the company must make application for a refund, and the income tax branch will have to satisfy itself, after examining the return, that in fact the payment of the surcharge would reduce the company's income below the 5 per cent mentioned in the resolution. They would get the refund for whatever amount was called for.


Ellen Louks Fairclough: Will that be handled by
the income tax branch or will separate courts decide the amounts, or through whose hands

Income Tax Act
will the transaction pass? I presume it will be necessary to make an examination of books?


Douglas Charles Abbott: My information is that the
Department of National Revenue contemplates that the application for refund would be filed with the return, and that the assessment would be made and the eligibility for the refund ascertained at the same time. Of course there would be the usual right of appeal if a taxpayer was not satisfied with the finding made by the Department of National Revenue.


James MacKerras Macdonnell: I should
like to raise a question as to the meaning of the expression, "capital employed", found in this section. Would the minister say a word on that? I have been looking at the relevant section.


Douglas Charles Abbott: At the present time we are
working on a definition that may be included in the bill itself as to what will constitute "capital employed", and I would prefer to defer discussing the terms of the definition until we have decided definitely whether or not this will be done. My hon. friend will recall that during the last war a definition was set out in connection with the excess profits tax. It may be that that definition, or something like it, will be settled upon in this instance. However, that has not yet been finally determined, and I would have to ask that the discussion be deferred until the matter is settled. It is a difficult and complicated question, and it is receiving the day-today attention of the offices of my department and those of the Department of National Revenue.


James MacKerras Macdonnell: It seems
unfortunate that that which is so vital should not yet be determined. I was assuming-and it turns out that I was assuming wrongly- that one would refer to the definition existing in section 68 of the act which, as the minister says, refers to the excess profits tax. In face of what the minister says, we are now passing this section, if we do pass it, something after the fashion of having the play without Hamlet-because, after all, this is a very vital factor.


Douglas Charles Abbott: At the present time we are
only discussing the resolution. The broad principle is indicated there. When the bill is before the house we will have further opportunity for discussion.
My hon. friend will appreciate that this is a relieving measure, and that we are anxious to have a definition which will be fair and which will give the relief considered equitable. It is for that reason that my officials

and those of the Department of National Revenue are examining the question closely in order that the definition used for "capital employed" will be one which will accomplish the purpose we have in mind.


Stanley Howard Knowles: Does the tax referred to in
the phrase "refund of such tax" refer to the whole of the corporation tax or just to the 20 per cent surcharge?


Douglas Charles Abbott: Just to the 20 per cent surcharge. The refundable provision applies only to that. The rate which now exists, that of 38 per cent, will be paid. But in the case of the surtax, if there is a reduction to a point below the 5 per cent of the capital employed, as mentioned in the resolution, there will be an allowance to the extent it may be necessary to hold it to that level.


Ellen Louks Fairclough: Will the definition of
"capital employed" be incorporated in the bill?


Douglas Charles Abbott: Of that I am not quite sure.
I should say frankly to the house that that is one of the most difficult problems we have to face in connection with this relieving measure. The bill as now drafted provides that the definition of "capital employed" shall be determined by regulation, which would have to be made public. My present view is that that would be desirable because I think we could examine carefully the actual results in connection with a wide range of companies and see what it is. I think I should say to the committee that I am particularly concerned with the type of public utility company whose rates are fixed by public authority. I am anxious that the imposition of an additional surcharge should not of itself necessitate an increase in rates.
That is one of the main reasons why I am anxious to see that a fair test be established.
I want to be absolutely sure that the test I is fair. In the bill as presently drawn provision is made for power to establish the definition by regulation. I think we had better discuss that aspect when we come to the second reading of the bill. It may be that my view will change on that before we come to second reading because, as I indicated this afternoon, I would hope to give hon. members a number of days, perhaps a week, to consider the provisions of the bill after it has been introduced.


Ellen Louks Fairclough: I would hope that this definition could be incorporated in the bill. While I recognize the difficulties with which the minister is faced, I would think that in view of the definitions that have appeared in other acts it surely would not be too difficult to frame a definition to cover the situation and give us some idea of what is proposed.

There are already two definitions, one in the Income Tax Act and the other in the Excess Profits Tax Act.


Douglas Charles Abbott: For co-operatives, yes.


Ellen Louks Fairclough: It should not be too difficult a job to prepare a definition which could be incorporated in the bill.	.


Douglas Charles Abbott: I hope it may be possible to do that, but I cannot give the assurance that it will be.


Mr. Low:: Mr. Chairman, the Minister of Finance will remember that on May 3 I suggested an alternative source from which he could obtain revenue, and as reported on page 2637 of Hansard I presented tables to the committee showing the net profits after taxes, made by, the dividends paid by, and the undistributed profits remaining in the hands of Canadian corporations. At that time I was told that the proper time to discuss that whole matter would be on the income tax resolution.
My suggestion was ruled out of order at that time, so at this time I should like to ask the minister one or two things about this whole question. I think the minister believes that the government should arrange its taxes so that they will be collected more or less on the basis of ability to pay. I think I am correct in that assumption. If I am correct, then I should like to know whether the minister honestly believes that the new taxes he is proposing in his budget will be collected strictly on the basis of ability to pay. I would ask him if it would not be sensible to go to the place where the money is in order to get increased revenues.
If his answer is in the affirmative then I should like to have him answer another question. Is it not true that he could easily pbtain another $100 million from the undistributed profits of corporations? On May 3 Jl suggested that 1951 was not likely to be a worse year than 1950. I pointed out that in that year the net profits of corporations in Canada, after taxes, amounted to $1,402 million. The cash dividends distributed to Canadians and other individuals and corporations abroad amounted to $672 million. That left undistributed profits of $730 million. That was $129 million more than the undistributed profits in 1949, which was a good year. In that year the corporations paid quite substantial dividends of $570 million, which left in their possession undistributed profits of $601 million.
On May 3 I also pointed out that during the nine years from 1942 these corporations had accumulated undistributed profits to a total of $4,648 million. At that time I said that I was in favour of the profit motive
Income Tax Act
because I believe that a reasonable profit perhaps is the greatest inducement for production, the provision of services and that sort of thing. But when I see individuals of *this country being loaded with a 20 per cent income tax surcharge for defence needs; when I see them being faced with a 25 per cent increase in the sales tax; when I realize that they just have not in their possession accumulated savings from which to obtain these extra charges; when I realize that consumers of this country are having a terrible struggle to make ends meet under the impact of the highest cost of living in the history of this country; I wonder why it is there is so much indifference to the suggestion that the $100 million which the minister said he needs from the sales tax-I doubt it very much- could not be obtained by turning to the corporations and asking them during the next two or three years when profits might be expected to be buoyant that they pay, not a 20 per cent surcharge but a 40 per cent surcharge on their income tax.
I suggested on May 3 that by doing that he would obtain $100 million and yet would leave in their possession undistributed profits of not less than $500 million for 1951, which of course was calculated on the basis of 1950 performance. The minister's forecast pretty much substantiates what I said. I ask the minister if it would not be more fair to impose a 40 per cent surcharge this year on corporation profits, realizing that it would still leave them $500 million in undistributed profits, than to place this load on the taxpayers of this country in the form of an increased sales tax?


Douglas Charles Abbott: The first question asked by my hon. friend was whether we should not go to where the money is. Of course we should, if we are aiming solely at revenue, which is one of the major purposes of the budget. Then he asks if that is the case why we should not go and take a full share of undistributed profits. In my budget speech I tried to make it as clear as I could why I think that as a general rule, and except in very exceptional circumstances, it is a mistake to attempt to take 50 per cent or more of profits from any organization. I think it makes for waste and inefficiency. In fact with this 20 per cent surcharge, if one includes the provincial tax of 5 per cent in the concurring provinces and 7 per cent in Quebec and Ontario, we are over that 50 per cent.
I think it should be realized that the undistributed profits of corporations are not in fact in cash. They are invested as a rule in plant, equipment, inventory and so on. Actually over the past four or five years in particular that has been one of the major sources of the increase in our productive

Income Tax Act
resources, expansion of plant, equipment and so on. To answer my hon. friend's question directly, I believe that it would be most unfair to put a 40 per cent surcharge, as he has suggested, on corporation profits. After all, we have to remember that corporations are not individuals, and that those profits are taxed again when they ultimately get into the hands of the shareholders. In that sense it is double taxation and the corporation is only a vehicle for collecting taxes.
I think it should also be realized that under existing conditions taxes imposed on business concerns probably go into the price of the goods, and with demands as they are now I must say that my own view is that an excessively high corporation tax could provide an impetus to inflation. I do not know that I can add very much to that. One can argue indefinitely as to the merits and demerits of a particular tax, but the job a minister of finance always has is to try to spread the burden of the taxes which he has to impose as fairly as he can. That is what I have tried to do this year. At the same time I think he has to try to use taxes as a fiscal and economic weapon to check inflationary forces. That again is what I have endeavoured to do in this budget. As I have said before, I do not claim any monopoly on wisdom, but the budget this year does represent my best judgment as to how those two purposes can be accomplished, and it of course carried the judgment of my colleagues in the government.


Solon Earl Low: Could the minister obtain figures which would indicate the portion of undistributed profits that were turned back into plant investment and expansion, and at the same time the percentage of undistributed profits that have found their way into unproductive investment such as bonds and securities?


Douglas Charles Abbott: I am told that there are probably no figures which would enable that to be given accurately. You would have to look at the balance sheets of the various business enterprises of the country. There is a real incentive under existing conditions to reinvest earnings in plant and equipment rather than keep them in low yield bonds. Speaking generally, I think it is fair to say that by far the greater proportion of the undistributed earnings of the business enterprises of this country have been reinvested in plant and equipment, bricks and mortar, machinery and so on. That has been demonstrated time and time again when you come to examine the record of a family business, for instance, over a period of years. You will find that it starts from small beginnings and it is

largely built up by reinvested profits. I think that is probably pretty characteristic of the pattern in this country and in most other countries like ours.


Solon Earl Low: I think that is perfectly true in connection with family corporations, but it would be very interesting to look at the investment portfolios of many of the corporations. I attempted to go into that whole matter and to find some figures that would be accurate, but as the minister says it is difficult.


Douglas Charles Abbott: I am told it is pretty well impossible to do it and do it accurately.


Solon Earl Low: But I have been wondering, since the minister has included in the budget some provision for restraining investment during this coming year, if he will not find that quite a number of corporations will take undistributed profits and invest in securities of some sort. If that is the case it would seem to me that he would be helping his purpose to a very great extent by taking this further tax that I have suggested.


Douglas Charles Abbott: They will have less than 50 cents left out of every dollar of earnings to do what my hon. friend suggests.


Solon Earl Low: Of course, and I am thinking of farmers and individuals across the country who will have much less than 50 cents.


Stanley Howard Knowles: Nothing at all.


Douglas Charles Abbott: No. A man has to get into a fairly high income tax bracket even under existing rates before his marginal rate reaches 50 per cent. I do not know what my hon. friend's income is. I have not quite figured mine up yet but I hope I will not be quite at that point on my top dollar.


Herbert Wilfred Herridge: I should like to have a few| words to say on this point because thej question of corporation profits is one of great interest to this group. It is obvious that we take a fundamentally different approach from the minister to this section of the Income Tax Act. The normal associations of this group are with working people and farmers, and it is quite reasonable to suppose that we would look at the question of taxation through somewhat different spectacles than the minister. I want to suggest that we in this group believe the minister suffers from certain budgetary astigmatisms which we trust some remarks on the part of the opposition will do something to correct. Before I proceed further, I might say that I am very interested to see that the hon. member for Comox-Alberni is also interested in this question of the taxation of corporations.

In his replies to the hon. member for Peace River, the minister indicated what his reasons are for not agreeing with the suggestion that there be an increase in corporation taxes. He said that to take more than 50 per cent is unfair and that the balance was needed for reinvestment in industry, the maintenance and increasing of production, and so on. As I understood him, that was the general tenor of his remarks. When he introduced the budget the minister said, as reported at page 1808 of Hansard:
The increases in corporation income taxes which I shall be proposing will drain off substantial amounts of corporate profits but the total volume of profits remaining in corporate hands will still be sufficient to maintain and, in some cases, to increase the capacity of corporations to plan additional capital investment without recourse to borrowed funds.


Mr. Gibson:: Hear, hear.


Herbert Wilfred Herridge: I hear the hon. member for Comox-Alberni saying "hear, hear" with relish. At page 1809 the minister went on to say:
I shall not repeat what I said about the excess profits tax last September. I still believe that it is not a sound tax except under very special circumstances, and I do not believe we have reached that point. A part of what I said about the excess profits tax, namely, that it blunts the goad to efficiency and that it invites waste, applies also to high rates of corporation income tax. It is, of course, a question of degree. I say quite frankly, lowever, that I am not happy about corporation ax rates when they go over 50 per cent. I think t is bad psychology to permit people to say that core than half of any income earned, or any avings made, will go to the government.
I think it is bad psychology when it comes ) the question of workmen but I do not link it is bad psychology in dealing with irge corporation profits in the manner sug-?sted by the hon. member for Peace River, l assessing the income tax situation we in lis group believe that the minister would ave been wiser, so far as the personal income ix is concerned, to exempt more of those in te lower income groups from the surtax in rder to keep the cost of living down for lem to that extent. We believe a graduated ix on excess profits also would have assisted i halting inflation and overcoming the short-ge of certain goods caused by overinvest-lent in capital goods at this time. I think 'e can learn something from the experience f Great Britain in that respect. The minder has said that high taxation reduces utput. It is generally recognized that hrough the years total taxation in Great Jritain, both on individual incomes and on orporate incomes, has been much heavier than taxation in Canada.


Douglas Charles Abbott: Not on corporate incomes.
Income Tax Act


Herbert Wilfred Herridge: I am talking about the most recent and total taxes.


Douglas Charles Abbott: Even with those.


Herbert Wilfred Herridge: I just want to bring to the minister's attention the level of output per man in industry in 1949 as compared with 1938, which is taken as 100:
United Kingdom	 118
Sweden	 118
France	 102
Italy	 98
Denmark	 97
Norway	 94
Belgium	 93
Holland	 81
I think this is evidence that the output per man in Great Britain under the circumstances, considering the war damage and the very difficult conditions they have experienced through the loss of a great deal of their overseas trade during the war and in the after-war period, has not been affected, nor has the total production been affected, by the high rates of taxation; because the total production is the greatest in Britain's history.


Douglas Charles Abbott: It is away below our output per man.


Herbert Wilfred Herridge: I am coming to that point later. Now what about commodity production per head of population? In 1949, in terms of dollars at 1938 prices, the figures were as follows:
Sweden	 255
United Kingdom	 226
Denmark	 202
France	' 158
Norway	 457
Belgium	 455
Netherlands	 445
Czechoslovakia	 129
Germany	 428
Iceland	 422
Austria	 405
Finland	 403
Poland	 404
Italy	 74
Bulgaria	 49
I remember the parliamentary assistant saying how much the Belgians had improved conditions in that country by working hard and endeavouring to rebuild its economy; yet on the basis of these figures it is far behind the increase in commodity production that has been attained in Great Britain. According to the United Nations economic survey of Europe the only country whose output per man has risen as much as Britain's is Sweden. Sweden was not in the war and did not have the task of converting industry to peacetime production. In 1946 Sweden's productivity already stood 11 points above 1938 whilst Britain's stood 3 points below. Since the war,

Income Tax Act
therefore, the British worker has increased his output by 12 points compared with the Swedish worker's 7 points.
In that connection I want to make a point in reference to the remark by the minister about our total output per man and our total production. Since the war the British people have increased their output per man to a far greater extent than have the Canadians up to the present. Some time ago I believe a member on the government side suggested that the possibility of increasing the per capita production in Canada at this time was very slight indeed. In 1948 the output per worker in Britain was 8 per cent higher than in 1947; in 1949 it increased 5 per cent over the 1948 figure, and in the first quarter of 1950 it was approximately 10 per cent higher than the year before. Since total manpower had scarcely fluctuated, this suggests a further considerable advance in industrial productivity this year; and of course these remarkable achievements were carried out in the face of very high rates of taxation.
As a result of that increase in productivity under these heavy rates of taxation, what has been the situation with regard to the level of real income per head in Great Britain, taking the pre-war level as 100? The figures are as follows:
United Kingdom	 118
Sweden	 118
Norway	 117
Denmark	 106
France	 101
Holland	 100
Italy	 92
As the minister knows, Great Britain has a higher rate of taxation than any of the other countries mentioned in that table. It is sometimes argued that a steep profits tax removes the incentive to the employer to increase production or expand his business. I believe the figures I have given will indicate that this is by no means the case, because since the end of the war taxes in Great Britain have constantly increased, and production has constantly increased as well. Profits are quite high enough even after taxation, even in Great Britain. Profits are not taxed until they are made. If the profit is not high, the tax is not high. Taxation is not a part of the cost of production. As far as Great Britain is concerned her productivity is limited to a great extent by the lesser amount of industrial power available per worker as compared to the United States, and by her difficulty in obtaining certain raw materials and access to natural resources.
In reply to the minister's suggestion that he does not like to take away more than 50 per cent of the profits of a company, and the need to leave at least 50 per cent of profits

for capital expansion in Canada, I want to quote a few figures that have been mentioned from time to time in the Financial Post. These indicate the percentage increase in profits made by certain corporations in Canada as between the years 1949 and 1950; and I will give just a few illustrations:
Percentage increase in profits, 1950 over 1949
Great Lakes Paper Company	 55	0
Canadian Utilities Limited-	 13-8
Imperial Oil	 21-3
Riverside Silk Mills Limited	 56-4
International Paper Company	 29-0
London Investment Corporation	 24-2
Atlas Steels Limited	 109-0
International Metal Industries Limited ..	54-0
Dominion Engineering Works	 34-3
Modern Containers Limited	 21-0
Dominion Fabrics Limited	 13-0
Aluminum Limited	 20-7
Famous Players	 14-9
Monarch Mortgage and Investments		57-0
Canada Foils Limited	 49-0
Wool Combing Corporation	 260-0
Bathurst Power and Paper	 54-0
Canadian Fairbanks Morse	 16-4
Mining Corporation of Canada	 50-0
United Service Corporation	 44-0
Amalgamated Electric	 143-0
McColl-Frontenac Oil	 56-8
Lake St. John Power and Paper	 65-0
St. Lawrence Corporation	 59-8
New Brunswick Telephone Company ....	75-0
Quebec Power	 43	0
British Columbia Telephone	 71-3
Kelvinator of Canada	 34-0
Robinson Cotton Mills	 99-6
I see the minister's adviser laughing; I sup pose he thinks this is an amusing debate st far as the taxpayers of Canada are concerned I quoted the New Brunswick Telephone Com pany for the information of those from th maritimes; and when we see the profits o the cotton companies it is no wonder cotto: prices are high. The net profits of all thes corporations I have listed have increased tre mendously between 1949 and 1950. We ii this group believe there is an opportunit; here to get the increased revenue we need as the hon. member for Peace River ha: said, instead of imposing the sales tax upor many of the things required by the working people of the country.
Now, Mr. Chairman, in further support of my contention I want to quote very briefly from a financial paper entitled "Canadiar Finance". This is published in the interest: of investment, banking, insurance, mining trade and public affairs. This is the May issue for this year, and it is written for people who are interested in business. Thi: article is entitled "Getting Tax-Free Surplus Secured; section 95A of Income Tax Act

allows companies to distribute accumulation of profits painlessly". It reads as follows:
Fifteen per cent tax is not a very high price to pay for a substantial "melon" if you are running a small business, and quite a number of business proprietors have been using or are planning to use the facilities of last year's Income Tax Act amendments to get their accumulated surplus funds freed of future income tax liability at the minimum cost. While it is impossible to generalize about the effect of the new legislation there has been a great rush to investigate its merits and in many cases it appears that the capitalizing of surplus, thereby assuring a future personal tax-free income, outweighs the cost of getting the corporation's undistributed surplus into a form in which it can be either held or distributed without further liability.


John Lambert Gibson: They have already paid tax on it.


Herbert Wilfred Herridge: Just let me finish this article, you can gloat later.
The budget resolutions introduced at current session have extended the scope of the right to all companies except subsidiaries, thereby doing away with a use of legal fiction by which some public companies have converted themselves into private companies for the specific purpose of qualifying under the 1950 legislation. This change had already been requested by many competent taxation lawyers.
Specifically, part 1A of the Income Tax Act, passed by parliament on June 30, 1950, provides that a corporation which qualifies as a "private company" may elect to pay a special tax of fifteen per
I cent on undistributed income he. by it at the end of the 1949 taxation year, the	oitalize such
undistributed income. With a few	'"ing refinements, this is a general principle.	!uent years
may each be treated separately a	^ has been
cleared. The effect is to allow closely held companies to get ac capitalized and therefore availab tribution into personal possession ifteen per cent tax. When it is i ninimum personal income tax no cent on taxable income, and that ir i laximum rate payable may reach r lore, the potential value of this n isualized.
Owners of red profits ^ater dis-lg only a that the tteen per tlases the cent or , can be
[DOT]tv
.t even an the Rations
Now, Mr. Chairman, it is obvi this financial paper sees advai present arrangements for the t oncerned. We in this group fi there is a great opportunity for 1 o secure considerably greater r [DOT] he corporations of this count damaging the operations of the and without affecting seriously t sion, rather than increasing tt ncome tax on some of the lav groups with the twenty per cent and the sales tax that has been un >ion. Therefore, Mr. Chairman, move that the resolution be an deleting paragraph 1, and si therefor the following:
(1) That, in respect of corporation inci
after the commencement of the 1951 call ._____
there be levied a graduated tax on exces, profits to the extent necessary to maintain the balance of ways and means.
Income Tax Act
We move that amendment, Mr. Chairman, to indicate our support for the principle of a graduated tax on excess profits rather than the taxation of lower income groups and the sales tax.


Louis-René Beaudoin: When the hon.
member moved his amendment he indicated he was doing so for the purpose of showing his support of the principle of corporate taxes in this form. I believe he has also a clear understanding of the fact that previous amendments of the same character have been declared out of order. I shall ask the committee if it is prepared to give unanimous consent, and if so I shall be glad to put the motion to the committee.


Douglas Charles Abbott: Mr. Chairman, the only danger with these things is that they create a precedent. My hon. friend has made quite clear what he has in mind in moving the amendment. For reasons which 1 have already given several times, I would oppose it. I believe that any amendment of this kind to be effective would have to contain a definition of excess profits, and so on. I would oppose the amendment. If it is clearly understood on the records of the house that this is not a precedent for moving amendments of this kind, I do not want to get into a procedural tangle and waste our time in a procedural argument. I believe the amendment is out of order, and perhaps to be logical one should adhere to that position.


Louis-René Beaudoin: Are there any
other hon. members who wish to speak to the point of order? Are the members giving their unanimous consent?


Some hon. Members:: No.


John Lambert Gibson: There is nothing before the committee, and there could not possibly be, which gives a definition of excess profits, without which no one would know what they were voting for.


Louis-René Beaudoin: I refer hon.
members to two rulings which were made early last week and which appear in Hansard for May 3, 1951, at pages 2640 and 2655. The rulings then made, which were based on an earlier ruling of November 10, 1949, would apply to the amendment moved by the hon. member. The hon. member has nevertheless accomplished his purpose. So far as I am concerned, I have no alternative but to rule the amendment out of order.


Herbert Wilfred Herridge: I bow to your ruling, Mr. "hairman, and I will try to draft a proper amendment for second reading of the bill.
-Mr. Hatfield: Will the minister say whether there is any advantage given to a corporation that reinvests its profits in plant and machinery?

Income Tax Act


Douglas Charles Abbott: No, they are in the same
position as anyone else. They can distribute them or reinvest them. That is a matter of business judgment.


Heber Harold Hatfield: Will the minister give the reasons for that? Why not make a corporation surcharge of sixty per cent, and then if the corporation reinvests in plant and equipment to give more labour to people, then allow the ten per cent or fifteen per cent.


Douglas Charles Abbott: That is a special tax on
distributed profits, and I do not see that is desirable at this time. The general level of tax which is established here is about as reasonable as one could expect.


Major James William Coldwell: Did the minister give any consideration to a graduated surtax so that smaller amounts of profit would have lower rates than the higher?


Douglas Charles Abbott: In fact, that applies as my hon. friend knows in connection with smaller corporations-


Major James William Coldwell: I know it does with the
smaller ones, but I was thinking of the larger ones.


Douglas Charles Abbott: -but in my view, and I know it is shared by my financial advisers, a graduated tax in the case of profits of this kind is not sound. These are profits which are going to be taxed again. In essence, you have double taxation on these profits. The corporation is not a living individual. You tax it at a certain rate, and then when the profits are distributed you tax them according to ability to pay. You have a steeply progressive rate going from 15 per cent in the lowest brackets to as high as 80 per cent in the highest, leaving out of account the surtax. I am no tax theorist, but I am told that is a sound tax structure. Personally, I would feel that a general graduated tax of this kind on profits would be unsound.


Major James William Coldwell: What I had in mind was
this. Where you have large profits and the corporation decides not to distribute those profits, if what the minister says is sound, namely that there is double taxation when you have the profits distributed, then it seems to me that there is a legitimate reason for suggesting something in the form either of a higher rate of taxation or of a graduated tax on the higher profits.


Douglas Charles Abbott: Just in order that I may get it clear, what my hon. friend is advocating is really a tax on undistributed profits.


Major James William Coldwell: I was just going to say that it is in reality a tax on undistributed profits. In my opinion that is preferable to taxing by way of surtax the incomes of those who are

finding it difficult to make ends meet. That is why, in the main budget debate, we moved an amendment suggesting that the exemptions-for the surtax only, of course-be $1,500 and $3,000 instead of $1,000 and $2,000. We had that end in view. With the tremendously high cost of living-and I am sure the minister must realize this-people in the smaller income brackets, as well as those who have incomes insufficient to be liable to income taxes at all, are feeling the pinch of high prices and inflation severely at the present time. What we are suggesting is that the minister might endeavour to find a way of getting the money, as the hon. member for Peace River says, where that money can be found rather than try to squeeze it out of many people who really have not any surplus at all; and who, if they were living at an adequate level of life, would indeed have a deficit every year instead of a surplus to tax. That is the point I am trying to make.


Douglas Charles Abbott: There are two points of view as to what should be done with regard to corporation profits. I know that my hon. friend has a great admiration for the present government in England.


Major James William Coldwell: They tax undistributed
profits.


Douglas Charles Abbott: 
Percy Ellis Wright: I should like to bring one >
point to the attention of the minister in connection with this matter. Great Britain anc Canada are in two entirely different positions. Great Britain found herself, when she came through the war, in the position that her industries were not properly adjusted to the production of goods as related to our production in Canada. Her industries were destroyed, Her methods were old. Mr. Gaitskell, through his budget-as indicated by the minister-is trying to get the industries in Great Britain modernized. That is why he is not taxing more heavily undistributed profits; it is so that it will be possible to modernize their equipment. We are in a better position here-


Douglas Charles Abbott: We can always do with
increased efficiency.


Percy Ellis Wright: -in a country like Canada where things are already modernized.


John Lambert Gibson: I do not know what is going
on down at the other end of the chamber; I do not know whether the Socialists are going Social Credit or whether the Social Crediters are going Socialist.


Mr. Maclnnis:: You would not know.


John Lambert Gibson: I think either thing would be bad. I have been rather surprised to hear the remarks made by my good friend the leader of the Social Credit party. He is a businessman. I think he knows what surpluses, as shown on company balance sheets, are. I think he knows it is not just money that is laid under a stump some place. It is not in the form of cash, as the minister has so clearly pointed out. It has all been reinvested in the business in most cases. Not many companies keep a great deal of cash hanging around. They usually have to borrow against securities in the bank to carry on their business. A surplus in these small companies is certainly the lifeblood of them, and the reinvesting of part of it into the business, putting it back into increased plant. If, in the first year they start to produce anything, the minister takes half of it to start with-and if there are any profits at all, they are invested in the company-the minister has a preponderant interest in it. Rather than tax surplus itself, I think maybe the profits that are not distributed should be taxed at a lower rate than distributed profits, and when they are taken out of surplus again, perhaps the tax could be larger than 15 per cent; but the minister has already covered that.


Major James William Coldwell: What happens under that sort of arrangement is this. Profits are left in the hands of companies who reinvest them in capital equipment and otherwise. In reality, you are taking from the public funds by means of profits and reinvesting them. In other words, the prfblic are thus paying for the capital equipment; but the company owns the equipment and assets afterwards.
What I really rose to say to my hon. friend is this. There is one aspect of this problem that I think we are overlooking-it is one perhaps that concerns the present economic system rather more than it would a different system-and it is this. By means of this method, corporations are becoming independent of the savings of the great mass of the public, of the banks, of trust companies and of other financial institutions, with the 80709-200J
Income Tax Act
result that power in our economy is becoming concentrated more and more in the hands of a group of industrialists. What we are really witnessing to some extent is a transfer of power from financial institutions and investors who did a normal business and performed a normal function in our economy years ago, and a concentration of that power into the hands of another group in our society. At the same time, they are preventing what was quite common prior to this important change, namely the small investor finding a place where he can invest his savings and his funds. He is narrowed down more and more merely to government bonds and other types of low-interest securities.


John Lambert Gibson: He can go to the stock market.


Major James William Coldwell: My hon. friend says "Go to the stock market." He knows that the stock market is much more speculative than is the reinvestment of funds in the company which is controlled by directors who have at their disposal all the information that is necessary to decide whether the investment is likely to be worth while or not. The average man has to take a chance with the stock market. I am pointing that out because I think in the present development' of our economy it is something that needs to be considered. It does not matter what your point of view is politically; there, I think, is a new and important factor; and is one of the reasons why I suggest that a tax on undistributed profits would be a good tax in this new country with a developing industrial economy.


Mr. Hosking:: I feel that there is one point that the socialists have overlooked in this discussion, namely that the most important thing in the Dominion of Canada is full employment. Wages are only relative. It does not much matter whether a man earns $10 a day or $5 a day as long as the things that he buys are relative to his earnings. The minister s taxation policy on corporations is one means of creating full employment. Canada is growing, and we must have capital for our industries, if they are to grow too. This is one means of placing capital at the disposal of industries in a reasonable manner, thus creating employment. Anyone who is opposed to increasing industries is opposed to the creation of jobs for the people who live in Canada. Since our population is increasing it becomes more imperative than ever that we have more and more industries. I suggest therefore that any legislation such as this, which tends to create more jobs and to give more work to labourers and which tends to bring about the good times we are now enjoying, is sound legislation.

Income Tax Act


Donald MacInnis: Mr. Chairman, I hesitate to speak on this complex question, because there are so many different views which could be expressed-and I have not the benefit of experts to advise me. However, after observing over some years the result of policies put into effect on the advice of experts, I have come to the conclusion that the experts can be wrong, too. If we have been following the advice of experts, and if they are not wrong, then I wonder how we have got into the mess we are in now.
Some hon. members seem to have strange views on the methods of increasing taxes, or of raising revenue. Several times each day I listen to newscasts-indeed, that is about the only radio program in which I am interested. I have noticed that, for the last while, every time I turn on the radio an appeal is made to the young men of Canada, most of whom have no property at all, to help save our free way of life. And, Mr. Chairman, if one may judge from what is happening in Korea today, saving our way of life may involve something more than paying some of our surplus money in taxes. It may, and sometimes does, involve the supreme sacrifice of life itself.
It seems to me that if we are to ask people to pay taxes, particularly if taxes are of such proportion as to involve a sacrifice, they should be told the purpose of the sacrifice. For most people paying taxes is a sacrifice, because they do not understand the purpose for which they are paying the taxes. Indeed, we have never told our people clearly why we must tax heavily. The result is that people complain that they are not going to work just in order that Doug Abbott may have a little more money. I do not take that position, because I know it is not the correct one to take. It is not Doug Abbott who gets the money; he is just the collector. The money is for Canada, and for all its people.
The criterion as to whether our taxes are heavy or light is not how much we pay but how much we have left after the taxes are paid.
When one considers the corporations that have 50 per cent of their not inconsiderable profits left, and compares them with the ordinary citizens of Canada who have not only nothing left when they have paid their year's bills, but have not had enough income in the first place to give them a decent standard of living, one realizes at once who is making the sacrifice. We know then where we should seek the money. We should look for it where it is, and we should not be taking it from people who did not have it in the first place.

Let us not forget that, as applied to a large proportion of the people in Canada, every cent we take from them in sales tax or other taxes, direct or indirect has to be restored to them through social services of one kind or another. That is the case because they are not paid a sufficient amount for producing the wealth of this country to enable them to live decently.


Douglas Charles Abbott: You have to pay for the defence of the country, too.


Donald MacInnis: Yes, we have to pay for the defence of the country. But in paying for defence consideration must be given to what one has to defend; and I say the corporations of Canada have much more to defend than have the ordinary men on the street who today may have jobs and who tomorrow are out of jobs.
Let us look at this picture as it is, and not try to talk about it from preconceived ideas that do not at all meet the situation we are dealing with today.


Mr. Gillis:: Mr. Chairman, I should like to say a word on this matter. There have been times in the house when a matter of this kind has been discussed with a good deal of seriousness. Lately however it has not been. The reason is that when anyone rises to criticize the government he feels, as was pointed out by the hon. member for Lake Centre, like the little boy who has spit in the cathedral.


Douglas Charles Abbott: Do you feel like that?


Clarence Gillis: The subject is almost sacred; one must not talk about it. "We have decided -and there are an awful lot of us." The opposition are hesitant, because those are the people who handle the payrolls and who give out the jobs. They are all-important.
That kind of thinking is out of date. Even in his day, Abraham Lincoln said, in respect of the question of capital versus labour, that labour created capital and wealth, and that labour came first, and that if it were not for labour there would be no capital. If I sit back and live off the swfeat of another man's brow, I am not the emancipator: the reverse is true. If it were not for the fact that there are thousands of men and women in Canada who are content with their humble role of producing the country's wealth for very little in return, a great many exalted persons who are making large sums of money would be starving, because they could not produce enough for themselves.
I do not say that disparagingly, because we recognize this as the scheme of things. What prompted me to rise at this time was the

remark of the hon. member for Comox-Alberni, a very good friend of mine, and an old logger who went through the mill.


John Lambert Gibson: Broken down.


Clarence Gillis: But finally his background has got away from him. He has gravitated down here and mixes among the exalted, so that he is beginning to forget where he came from.


John Lambert Gibson: I sit in opposition, too.


Clarence Gillis: He said the hon. member for Kootenay West in moving his amendment had not defined what excess profits were. I would point out that that has been defined many times in the house. The government itself set the formula in 1940, 1941 and 1942 when it said, "If you were in business between 1936 and 1939 your normal profits will be struck in relation to those three years, and we will perhaps give you fifteen or twenty per cent more than that." Excess profits were considered at that time, and the provision worked out satisfactorily.
The fact of the matter is that most of the plant and equipment in Canada today was financed by the taxpayer and written off at accelerated depreciation. We do not own those goods; we gave it away; for three years we wrote it off. That is a very easy way of getting into business.
There would be no difficulty today in setting up an excess profits tax. The government could say, "We are going to go back to 1947, and make that your normal profit." There has been a skyrocketing of profits since 1947, as indicated by the table put on the record by the hon. member for Kootenay West. Do you want to allow him a little more on top of what he is getting today?
I think the hon. member for Vancouver East dealt with this quite properly. We are asking men to give up everything they have in this country to fight for us. Do not make any mistake about it, it is not the executives and the fellows who make the payrolls who are going to do the fighting in Korea or anywhere else. This fighting will be done by the man who works in the shop or the factory, the young fellow who is physically fit and who is making perhaps $2,000 per year. He is the one who is going to do the fighting; he is the one who has always done the fighting.
You are asking these fellows to put on uniforms to save the institutions of this country for as little as $2.35 per day, when they are swapping at least $10 or $12 per day in other occupations. He is asked in the final analysis to perhaps risk his life for $2.35 per day. In the face of the profits made today by large corporations across this country how
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can anyone justify asking these young men to do that kind of job unless he is prepared to make similar sacrifices?
In my opinion inflation is the greatest enemy we have. It constitutes the most serious defence matter we have to consider. We are spending $5,000 million in the next three years, and on the basis of present prices we are going to get only half value; we are going to lose in purchasing power about 50 per cent of the money we will spend on defence. The Minister of Finance has said that we must pay for defence. Certainly we must, but who is getting that extra money because of inflation? It is no one else but the fellow who is marking that ledger and skyrocketing profits. There is no doubt about it, he is price fixing. He sets his own prices. He calls the shots. All this leads to waste and extravagance and that kind of thing.
If that analysis is correct, it adds up to simple dishonesty. I have never seen it that way. I think of the progress we have made in pensions and all that kind of thing in the last ten years and I suggest that it is all due to the fact that these corporations decided they might as well pay out profits in that way rather than in excess profits taxes. If we had good stiff excess profits taxes I think they would go a long way toward stopping rising prices. There would be no incentive to raise prices if you could not keep your profits.
I think this matter will have to be considered seriously. We are only just beginning to siphon off manpower and buy our defence equipment. I think that is one particular spot the government should get tough with. I think the time has come when we should all consider it most seriously. The fellow who makes the payroll should not think he is all-important. I consider that the fellow who produces the payroll is the important man. Without him there would be no payroll. The fellow who is just writing figures and making a good profit out of them should consider himself very lucky in comparison with the man who produces the wealth.
I know we cannot do anything about these matters. As I said a moment ago, we are just bumping our heads against a stone wall. But it does not do any harm to have a re-examination of conscience every once in a while in the hope that we might be able to drive home to the Minister of Finance and his advisers that this is one matter they will have to tackle, if for no other reason that for defence and the encouragement of those whom we are asking to leave home and go to other parts of the world to make great sacrifices for us.
I should like to say a word to the hon. member for Comox-Alberni about the right to a profit on your investment. Sometime

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he should go to the library and get the Macdonald report on the British Columbia mining industry. He will see where these rights were given away for the building of a railroad and then capitalized at about $10 million. They got these rights for nothing, they marked up the price of coal in order to pay dividends on watered stock of about $11 million, and around and around it went just like a merry-go-round. That report offers a pretty good analysis of practically every corporation in this country. When you squeeze all the water out of their stock they will not find it hard to pay profits on the actual capital invested.
I hope this discussion will be taken seriously by the minister and he will come into the house shortly and say that his conscience has bothered him a little and he believes this is necessary.


Louis-René Beaudoin: May I say that in my view the discussion could be more closely related to section 1. Certain statements were made, then the minister gave some explanations, but from there on the committee has got into an academic discussion covering the whole field of economics within and outside Canada. If the discussion does not terminate shortly by the clause carrying I feel that, for the benefit of hon. members who are not participating in the discussion, I shall have to intervene and indicate that the discussion must be relevant to the item before the committee.


Mr. Hansell:: Mr. Chairman, I am sure that we all agree with your'observations and will want to abide by your ruling in respect to these matters. However, corporation taxes are somewhat involved. Speakers who have preceded me have attempted to draw a comparison between the justice of taxing the wage earner and those who produce the wealth and permitting corporations to pile up certain profits without similar taxation.
I should like to say a word to those who have preceded me. I think perhaps we are pursuing a wrong tack. Those who have spoken in this debate have spoken rather powerfully, but the minister has sat there without saying a word. The hon. member for Rosetown-Biggar referred to certain financial policies followed in Great Britain and the minister twigged a slight error that was not of great consequence and rase momentarily to point it out. However, he did not answer the argument. The hon. member who leads this group spoke rather powerfully, as did the hon. member for Vancouver East, and we have just listened to a plea for justice by the hon. member for Cape Breton South.

May I say to these gentlemen that I think the tack we should follow in our pleading with the minister is to say to the minister: Mr. Minister, do you agree with that? Is the soldier in Korea paid so much today and does he have to pay taxes? Do you agree with that? Is that right? If the minister says it is right then it will go right into Hansard. We should follow the same course right through because I can see that all the pleadings we may make with the very passions that flow from the innermost parts of our souls are not going to change the minister's mind. The hon. member for Cape Breton South hopes that the minister's conscience may prick him so that he will return later and reverse his policy. My, my, what a hope! Finance ministers come and finance ministers go, but the financial policy remains the same. Therefore I think, gentlemen, that we will have to go into a huddle and change our tactics to see if we cannot prick the minister's conscience enough for him to say right now: You have got me there, boys. I cannot keep back the tears. I must change this policy right away.


Mr. Fair:: May I ask the minister whether any further consideration has been given to relieving the active service forces from having to pay income tax while they are on active service?


Douglas Charles Abbott: I intend to deal with that at some length when we come to the section dealing with amendments to the income tax relating to the armed forces.


Mr. Bater:: Mr. Chairman, most of the talking seems to be taking place on this opposition side of the house tonight, and I think I may as well get in a word or two for half a minute.


An hon. Member:: You had better be careful.


Mr.   Baler@: One of the hon. members on my left stated that the public is paying, so far as these corporations are concerned. I should like to tell him that, so far as the government of Great Britain to which he referred is concerned, I think the people of Great Britain are paying. If I had known this discussion was coming up tonight I would have brought with me a letter that I received from a relative in Great Britain about three weeks ago, and I would have read it on this occasion. Another hon. member mentioned the mess we find ourselves in. I think there are many people in other countries of the world, which have a different system from our own, who are also finding themselves in a mess. While the socialists' idea is that they will get social security and economic freedom through

a system different from ours, I think they will find that in the final analysis they will end up with no social security or economic freedom. I contend these are things that we should keep in mind when we are discussing this issue tonight.


Wilbert Ross Thatcher: I should like to take a minute or two to say something in this debate. I had not intended to, but after hearing the hon. member for Cape Breton South and the hon. member for Kootenay West I thought I should make my own position clear. In this party we can differ now and then, and I regret that I must say that I do differ tonight with some of the views that have been expressed by members of my own party. The corporation tax level in Canada and in my own province of Saskatchewan is now 51 per cent. I have a small business, and perhaps I am biased because of that. Nevertheless when I pay that 51 per cent I pay it in hard cash and the minister leaves me my stock in trade and bad debts, many of which may or may not be collected. I think that he is taking a lot more than 51 per cent from me at the present tax levels.
I also believe that when he stated that in England only 10 per cent of undistributed profits are taxed he had a very strong point. I could be all wrong but it seems to me that, so far as taxes on corporations in Canada are concerned, we have almost reached the saturation point in peacetime. If war comes of course a further excess profits tax may possibly be imposed; but at the present time, and speaking from my own experience, I do not think that taxes can go very much higher. I say that to make my own position clear. If more revenue is needed then I think it is going to have to come from greater production, perhaps from more people in the country or something of that kind. Perhaps we are even going to have to borrow if we need more money for defence. As I say, I could be all wrong but I do not think my colleagues will object to my making my position clear.


Major James William Coldwell: One of the great strengths
of democratic organizations is of course that there can be differences of opinion expressed freely and openly.


An hon. Member:: Hang on to the good
ones.


Major James William Coldwell: I certainly do not deplore
that sort of thing. I want to say, however, that I think my hon. friend is mistaken in one particular at least. This is not peacetime. What we are suggesting is a policy that in reality is a wartime policy. It is true that we are not engaged in the kind of war in which we were involved from 1939 to 1945, but we are spending as much money this year as we did in the early part of that
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great struggle. To that extent, while it is a defence effort, it is analogous in expenditure to a war effort. I am also going to say that I suggested when I rose a little earlier that we should have a graduated tax on corporations, as we have on individuals. The Minister of Finance pointed out that there was a certain exemption now for the smaller corporations. That is true, and I think that can be adequately defended, but what we are pointing out in our remarks tonight is that here we see these vast accumulations of money. It is all very well for my hon. friend to say that it is not in liquid form and therefore no part of it could be paid in taxes, but that is not wholly true. A great deal of it is in liquid form. It comes into their hands in liquid form. It can remain in liquid form, and it can be liquidated by the Minister of Finance.
I believe that we are expressing a point of view that is sound, just and fair. The hon. member for Cape Breton South pointed out very accurately and forcefully that we are asking thousands of young Canadians to offer to surrender not their profits but their lives, and when they do not surrender their lives, they risk their futures, for the defence of the democratic way of life which, regardless of our political views, we all profess and wish to defend. I do not want to transgress the rules, Mr. Chairman, but I want to say that I believe we are speaking, not only for our party but for a large number of people who are not of our party, when I say that instead of taxing the less fortunate individual, who is finding it very difficult indeed to get even the necessaries of life, we should call upon those who have accumulated vast amounts of wealth and of power to surrender, in this time of preparation for defence and high expenditures, some of that wealth and thereby relieve the people of this country from the great burdens that they have to carry.


Douglas Charles Abbott: I do not want to hold up this clause, nor do I want to prolong this discussion on corporation profits; but I do not know whether it is generally realized that under this proposal the majority of Canadian corporations will pay a higher tax than they paid during the last war. Companies whose earnings did not exceed the average for 1936 to 1939 only paid 40 per cent of their profits during the last war; and that repre-* sented by far the greater number of corporations, both large and small. And at that time there were no provincial corporation taxes, because under the wartime tax agreement they were suspended.


Major James William Coldwell: But there was an excess profits tax.

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Douglas Charles Abbott: I do not know whether the public or the members of this house generally realize that the great majority of Canadian corporations will pay a higher proportion of their earnings in corporation taxes today than they did during the last war. I just wanted to make that point. I make it without argument, as an assertion of what I know to be the fact.


Major James William Coldwell: But in addition to the corporation tax during the last war a very substantial excess profits tax was imposed.


Douglas Charles Abbott: Only if the profits exceeded their standard; that is my point. The minority of corporations, which had war contracts, paid an excess profits tax; but the great majority of corporations, the average corporations, paid 40 per cent and no more.


[Stage Direction]
Paragraph agreed to.
2. That an individual shall pay a defence surtax equal to
(a)	for the 1951 taxation year, 10 per cent and
(b)	for each subsequent taxation year, 20 per cent of his ordinary income tax (including investment surtax) for the year before allowance is made for tax credits.
Stanley Howard Knowles: I rise to protest against the application of this 20 per cent surtax to individuals at the low level to which it is made to apply. We have already expressed our opposition in the form of a subamendment during the main budget debate, but I repeat that we feel it is most unfair that married couples with less than $3,000 of income should be called upon to pay this 20 per cent surtax.
We all recognize the need to increase the income tax rates if additional revenue must be found. Indeed, when we were discussing the resolution having to do with commodity taxes we objected to taxes of that kind on the ground that they are not based on ability to pay. We argued that the fairer tax to employ is the income tax, because it is based on ability to pay. Therefore we assert that when larger revenues are required the proper kind of taxes to employ include a graduated corporation tax and a graduated personal income tax.
We contend, however, that you destroy the whole principle of graduating those taxes, and you defeat the aim of basing them on ability to pay, when you apply this 20 per cent increase right across the board starting with the very first dollar of income tax a person has to pay. At the present time the exemption levels are $1,000 in the case of a single person and $2,000 in the case of a married person. This means that a married couple without children, with an income of $3,000, have an exemption of $2,000 and pay income tax on $1,000. The amount of tax

paid under the old rates was $150. This surtax will require that couple to pay an additional tax of $30. I point out that back in the period 1935 to 1939, when the dominion bureau of statistics worked out the cost of living index to which we make frequent reference, the income tax exemption level under the federal act was $2,000, just the same as it is now. In addition to that the allowance for a dependent child was $400 as opposed to $150 at present.


Douglas Charles Abbott: It is $400 now if they are not in receipt of family allowance.


Stanley Howard Knowles: Yes, but the child eligible for family allowance is computed at $150.


Douglas Charles Abbott: That is correct. There was no family allowance then, of course.


Stanley Howard Knowles: That is right.


Douglas Charles Abbott: My hon. friend knows that this same couple paid $584 during the war?


Stanley Howard Knowles: Oh, yes; but the minister cannot have it both ways. He cannot argue that we have not approached wartime conditions when he is talking about the corporation tax, and suggest that we make a comparison with wartime conditions when we are talking about the personal income tax.


Douglas Charles Abbott: I have hit most of the corporations harder than we did during the war.


Stanley Howard Knowles: You forgot to mention the wartime excess profits tax. But are we back on paragraph 1, Mr. Chairman?


Douglas Charles Abbott: Well, you raised the point.


Louis-René Beaudoin: We are on paragraph 2 and hon. members will please speak to paragraph 2.


Stanley Howard Knowles: Thank you, Mr. Chairman. That is what the hon. member is trying to do. I was endeavouring to point out that during the years 1935 to 1939 when the cost of living index was worked out at 100, it was on the basis that the actual expenditure incurred by certain so-called average families amounted to $1,453 a year. When we talk of today's cost of living index being 181-8, it means that it costs 181-8 per cent of that $1,453 for that same basket of goods and services. Now I point out that when the recognized basket of goods and services cost $1,453 a year the income tax exemption for a married couple was $2,000. Today that same basket of goods and services costs well over $2,600, yet the income tax exemption level is still the same figure of $2,000.
If it were peacetime, today's high cost of living would make our case unanswerable that the exemption level for a married couple

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should be raised to $3,000 with comparable increases for children. I insist on that; if it were not for the wartime or semiwartime conditions facing us, today's cost of living would make it essential that there be no income tax below the $3,000 level. In view of the situation we are in and the need for additional revenues, I suggest the least the minister should do is exempt those people with incomes between $2,000 and $3,000 from this surtax. The same argument applies with respect to single persons. Their exemption at the moment is $1,000. I should say that certainly the first $500 of their taxable income -the amount from $1,000 to $1,500-should not be subject to this 20 per cent surtax.
It would be very easy to work that out in the form of an amendment if there were any possibility of persuading Your Honour that an amendment would be in order. I recognize all the rulings that were made during the other debate, however, and I will not put Your Honour to the trouble of looking up the book to find ways in which to rule out of order any amendment I might make, but I will suggest the kind of amendments which it seems to me would be appropriate. Perhaps if I suggest them to the minister and leave him the privilege, he may move one himself. On the one hand it could be proposed that there be an amendment to paragraph 2 adding a phrase similar in spirit to the last part of paragraph 1. We remember that paragraph 1 had a qualifying clause to the effect that the surtax was not to reduce the income of a corporation below a certain point. I should like to suggest to the Minister of Finance, since he could move the amendment although I could not because it would be a money amendment, to add to clause 2 an amendment which would suggest that these taxes are subject to the right of refund where they reduce the net income of the taxpayer to a point below that necessary to maintain a decent standard of living at today's prices. Is that not just as fair a request as was contained in the qualifying clause with respect to paragraph 1? The minister wants to get additional revenue out of corporations. He wants to get all that he can but he wants to be fair. He must not go too low, so he puts in a qualifying phrase. The minister wants to get all the money he can out of the personal income tax. Why should he not be fair to the single person in the $1,000 to $1,500 bracket, and to married couples between $2,000 and $3,000, and add a qualifying phrase such as the one I have suggested based on the kind of qualifying phrase he put in paragraph 1?
If that sort of amendment seems rather hard for the minister to word in such a way as to define the amount necessary to maintain a decent standard of living, then he could do it very simply by means of another amendment which I would offer to him. It would read something like this: That this surtax set out in paragraph 2 shall not apply to the first $150 of tax paid by a married couple or to the first $75 of tax paid by a single person. That is a simple way to do it, and it achieves the proposal that we made in our subamendment during the course of the budget debate. The figure of $150 is the amount of tax paid under the present rate by a married couple on their first $1,000, that is the $1,000 between the figures of $2,000 and $3,000. I suggest that bracket should not be subject to surtax. In other words, the first $150 of tax paid by a married couple should not be subject to this 20 per cent. Similarly, in the case of a single person the first $75 paid is, to use the same kind of example, the tax he pays on the amount between $1,000 and $1,500; in other words, the first $500 of taxable income. There, too, I suggest that the surtax should not be paid.
I recognize, Mr. Chairman, that this proposal was made in our budget subamendment, but it was not discussed to any great extent during the course of the budget debate. I do not recall the minister replying to it. I feel that he should now deal with this matter, and indicate whether or not it is possible to give consideration to this suggestion. He brought down his budget on April 10, and at that time we had before us a cost of living index figure which was the highest in history. Another month end has gone by and that highest figure in history has gone still higher. I point out that this simply means that single persons with less than $1,500 income and married persons with less than $3,000 a year income are finding it still harder to make both ends meet. I believe it is a most reasonable request, namely, that the people in those brackets should not be subject to this defence surtax.
I wish to make it clear that I am not opposing the main part of paragraph 2. When we were discussing the sales tax we said that the income tax was a fairer method. Now that we are on the income tax, I support it. If it is necessary to make up for any loss of revenue because of my proposal that these lower income groups be not subject to the surtax, that could be made up in either one of two ways: either by increasing the percentage in the higher brackets or by going back to paragraph 1 and increasing the rates in the upper brackets of corporation income tax. Like the member for Macleod, Mr. Chairman, I hope that when we are

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making these proposals we are not just pouring out our hearts and making an impassioned plea which the minister is going to ignore. I am sure he will not. I am sure he will discuss this matter, and that he will find there is a pretty general feeling amongst members in all parties that it is unfair to impose this surtax at the low levels which this paragraph proposes it should apply.


Douglas Charles Abbott: Mr. Chairman, I would be very glad to comply with my hon. friend's request and deal with his suggestion. There are two elements in connection with the imposition of any personal income tax; one is the level of exemptions and the other is the rate at which the tax is imposed. As is well known to all members of the house, our exemptions are very much higher than the exemptions in the United Kingdom, and higher than the exemptions in the United States. The tax that is imposed, even with the surtax which is now suggested, on the people in the group to which my hon. friend has referred, the $3,000 group and below, is infinitely less than the tax which is imposed in the United Kingdom, and very much less than the tax that is imposed in the United States. I take these two countries as being countries whose responsibilities for defence and other things are, to some extent, comparable with our own.
Now, it is perhaps unnecessary for me to say that in formulating my tax proposals I gave most earnest consideration as to what should be done with respect to exemptions and what should be done with respect to the rates. I came to the conclusion, as I said in my budget speech, that for this year I did not propose to touch the exemptions, and I did not propose to touch the graduated rate schedule. But I did propose to put a twenty per cent surtax on the amount of the tax payable. Now, that represented the best judgment I could come to as the fairest way of spreading this burden, after a great deal of consideration and a good deal of discussion with my advisers. My colleagues agreed with my recommendations. It would be pleasant if we could get all the money we needed from people with incomes of $5,000, $6,000 or $7,000 per year or more, but there are not enough of them in the country to provide us with all the revenue. I suggest to the committee that since our exemptions are already higher than those two countries I mentioned, since the actual tax which is imposed even after the increase which I am suggesting is still substantially lower than the countries to which I have referred, it is rather difficult to suggest that this is a manifestly unfair tax schedule.


Ellen Louks Fairclough: I should like to ask the
minister what the intent is under clause 2 (b)

with respect to the imposition of the surtax. Does this mean that the surtax will be calculated on what is described in the income tax form as net tax payable, or is it to be imposed before the allowance for the ten per cent dividends from taxable Canadian companies which is deducted from the tax? In other words, is it to be imposed on what is described in the income tax form as the total tax or is it to be imposed on what is described as the net tax?


Douglas Charles Abbott: The surcharge will be imposed on the tax as calculated before any tax credits are taken. Of course, in arriving at the income taxable one will deduct charitable donations, medical expenses and the like. Then a calculation will be made of the amount of tax. We have all been doing that for some time. The surcharge will apply to that figure. Then, when the tax payable is arrived at these credits will be taken for foreign taxes payable and so on.


Ellen Louks Fairclough: On the tax form the ten
per cent of net dividends from taxable Canadian corporations is not described as a credit. What is described as a credit is a credit for foreign tax. The 10 per cent, as I understand it, was allowed to correct a practice which had been common in the department in former years which amounted to double taxation. By the allowance of this 10 per cent deduction it was felt that this practice had been at least partially overcome. If it is the intentiorj of the minister to revert to the former practice and permit this 20 per cent surcharge on the tax before allowance for dividends, then in effect what you are doing is going back to the former system and permitting at least some of this taxation in a double capacity. Twenty per cent of it, of course, would be double taxation.


Douglas Charles Abbott: It is merely a simple way of
calculation. Instead of changing the rate structure, we make a 20 per cent increase. It is merely a method of calculating your tax. There is no double taxation involved. I think my hon. friend is mistaken there.


Ellen Louks Fairclough: No. The only mistake I
made is in not making myself clear, I am sure. I am thinking in particular of those people who have a small income almost entirely from dividends, from their savings. A great many of them were released from the obligation of paying taxes by reason of this allowance of 10 per cent against their taxes. Under this scheme, if it was a matter of $2,000, it means a difference of $40 tax to them, if the surtax is going to be imposed before the credit is allowed for the 10 per cent off Canadian dividends.


Solon Earl Low: I think the suggestion made by
the hon. member for Winnipeg North Centre has a great deal of merit.


An hon. Member:: It is quite simple, too.


Solon Earl Low: Yes, it is quite simple. But I
also think that the technique suggested by my colleague the hon. member for Macleod is a good one. In view of the fact that the Canadian dollar today is worth only about 55 cents in terms of the 1935-39 dollar, and consequently the $2,000 exemption for married people under the Income Tax Act would be worth only about $1,100, I am going to ask the minister if he does not think that the suggestion made by my friend the hon. member for Winnipeg North Centre is sound. Does the minister not think that the individual taxpayer throughout this country ought to be given some consideration in virtue of the fact that his exemption today is not $2,000 but is actually $1,100? I am speaking of the married exemption. I should like to have an answer.


Douglas Charles Abbott: I will answer my hon. friend's question in the negative. Since the $2,000 exemption before the war, we have fought a war and we have increased our debt some two or three times. We have all the additional charges imposed on Canadians as a result of the war. We have had a $400 million or $500 million addition to our social security payments. We must therefore raise more money from the taxpayers of this country.
As I said in reply to the hon. member for Winnipeg North Centre, there are two elements to be considered in determining taxation. One is the rate of exemption and the other is the rate of the tax. Actually, the $3,000 married man with no dependents, to whom my hon. friend referred in his speech, paid $584 in taxes at the peak of war taxation.


Stanley Howard Knowles: What year was that?


Douglas Charles Abbott: That was in 1942-43. Then
he paid $584.


Stanley Howard Knowles: The cost of living index
was 117 then.


Douglas Charles Abbott: Let us leave the cost of living index aside.


Stanley Howard Knowles: Oh, no. And it is now
181-8.


Douglas Charles Abbott: This year he will pay $150,
plus 10 per cent surtax or $15, a total of $165. It is all very well to talk about increasing the exemption and lowering the rate. But let me reiterate-as I have had to do so many times before-that one must get the money from the Canadian people, and one must get it from the people who earn
80709-201i
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in excess of these exemptions which I have mentioned. There is no use talking about getting it from the millionaires, because there are not enough of them. As a matter of fact, we impose extremely stiff taxes on millionaires. Never mind the cost of living index, or what the index may have been since 1939; I reiterate what I said before, namely that in the United States and in the United Kingdom the exemptions are substantially lower than they are in Canada and the rates of taxation are higher.


Solon Earl Low: In reply to what the Minister
of Finance has just said, namely, that the rates in both the United Kingdom and the United States are substantially higher, I would point out to him that food prices in both of those countries are substantially lower than they are in Canada. That makes a real difference.


Douglas Charles Abbott: Has my hon. friend been in
the United Kingdom lately?


Solon Earl Low: No. But what food people can buy there is substantially cheaper. There is not any question about that. I think my friend the hon. member for Selkirk, just a few days ago, put on the records of this house a table showing comparative prices of certain standard foods in the United States and in Canada; and without a single exception, they were lower in the United States than they are here.


Douglas Charles Abbott: My friend the hon. member for Winnipeg North, I think it was, told me that he had lunch in the Senate restaurant in Washington where an ordinary piece of pie cost 35 cents and a steak cost $2.75. I would ask the hon. member to compare those prices with the prices in our parliamentary restaurant here.	i


Stanley Howard Knowles: Wait till you eat in our restaurant on Monday!


Ellen Louks Fairclough: On this point which has just been discussed, I should like to ask the minister whether the rates that he quoted-and he takes the years 1942 and 1943

include compulsory savings.


Douglas Charles Abbott: No. That was pure tax. '


Ellen Louks Fairclough: To revert to my former question, I am still not clear whether the minister meant definitely that this surcharge would apply on the total tax.


Douglas Charles Abbott: Let me make it asi clear as I can. It is merely a method of calculating the tax. Suppose a person has a net taxable income of $1,000. His tax would be $150. Ten per cent added to that will make it $165. That is his tax payable. It could be done in another way. Instead of a 15 per cent rate, we could have made it an 18 per cent

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rate. With half the rate for this year, you would have got exactly the same result. That is the tax.
There is a variety of tax credits. The taxpayers can take credit for 10 per cent of the dividends received from common shares; and if they have received $1,000 in dividends from common shares, they can deduct $100 from that $165 tax, just as they could last year; and if they have paid certain taxes in a foreign jurisdiction, I suppose they could deduct those. There is no change in principle or practice at all. It is merely a method of calculating the additional tax. If this system prevails throughout next year you could, I suppose, with equal force say that the initial rate would be 18 per cent instead of the 20 per cent surcharge. That is as clearly as I can explain it.


Ellen Louks Fairclough: It is quite clear now. I was hoping that was not the case because, of course, as to those people who make just barely enough to get by, and when what they do make is the result of lifetime savings, it seems to me a great pity that they shall have to pay, the first full-year, an additional $40. It is lifting them out of the non-taxable class and putting them into the taxable class.


Douglas Charles Abbott: They could not have done that; because after all, there has been at least a 15 per cent rate on all income and the tax credit is 10 per cent.


Ellen Louks Fairclough: If they made $1,500 in dividends, they would have $150 exemption which is the equivalent of the total tax they Would pay. If their income was $2,000, you can see where it places them.


Mr.   Baler@: 
Gordon Francis Higgins: I agree in great measure with what the minister has said. In fact, I can hardly understand how he is going to raise this large amount of money without the taxes that he is imposing. I tried to follow the arguments of my hon. friends to the left of me; but I do not think there is enough money in the big corporations for the government to be able to take from them sufficient to raise the money that is needed here for a war effort.
That, again, is only my opinion, of course. But there is one part of the population which I feel has suffered a great injustice, and I am referring to those who are on fixed pensions. I am sure the minister has taken this into consideration, but I should like to have an explanation of how, with the cost of living

index as it is today, a person on a pension fixed five or ten years ago can live in a normal fashion. I do not mean "normal" under present circumstances, but normal as we would expect he should be able to live. I do feel that in respect of fixed pensioners there is a great injustice, and that there should be a higher exemption.


Douglas Charles Abbott: There is the $500 exemption for those of sixty-five years and over, which includes a good many pensioners.


Gordon Francis Higgins: Many people on fixed pensions are not sixty-five years, but they still have to eat.


Douglas Charles Abbott: That is considered the normal pension age.


Gordon Francis Higgins: In other words they have to do the best they can until they reach the age of sixty-five. I think that is unfair.


Douglas Charles Abbott: One would expect, unless they are incapacitated, that they would work until the age of sixty-five is reached.


Percy Ellis Wright: In the discussion on paragraph 1 the minister established a precedent for doing exactly what the hon. member for Winnipeg North Centre is asking him to do in connection with paragraph 2. The corporation making $10,000 or less in profits is not subject to the 20 per cent surtax. They pay only 15 per cent on their corporation tax, and do not come under this section at all. The precedent has been established whereby the small corporation does not have to pay the surtax. I do not see why the minister is not prepared to say that the man or woman on a small income should not be relieved from the 20 per cent surtax, inasmuch as the small corporations do not have to pay it.


Douglas Charles Abbott: I cannot add anything to what I said a moment ago.


John Horne Blackmore: I wonder if the minister would mind telling us whether he is imposing these surtaxes or surcharges as an antiinflationary measure, or purely as a means of raising revenue?


Douglas Charles Abbott: I thought I made it clear in my budget speech that both elements were important. I need these moneys, both as a means of raising revenue and for the antiinflationary effect which, I believe, will be the result from the raising of the tax. That is my view. It may be a mistaken one.


John Horne Blackmore: Does the minister assume there is a shortage of supply of the ordinary necessities of life in Canada?


Douglas Charles Abbott: The hon. member's question covers a wide field. I would say there is a shortage of a good many essential materials,

such as steel, which enter into the production of the normal necessities people have to have. I think it is fair to say that there is today in Canada a greater supply of spending power than there is of immediately available goods. That is a major reason for the present inflationary tendencies. But if one includes in necessities of life basic food products, probably not, although apparently we have not an over-supply of butter at the present time.


John Horne Blackmore: Has the minister any statistics or figures by which he can establish that there is a relative shortage of goods as related to the money in actual working circulation in Canada?


Douglas Charles Abbott: I do not think I have. I believe one has to draw that conclusion from the cost of living index.


John Horne Blackmore: I wonder if the minister is justified in drawing that conclusion from the cost of living index, having in mind the fact that the cost of living has risen largely as the result of manipulation rather than as the result of spending power.
Just to refresh the minister's mind along this line, may I recall to him that in April of 1946 the government granted the steel companies of Canada the privilege of advancing the price of steel by $5 a ton. I think the minister would have a hard time establishing, even before his most sympathetic friends, that that increase of $5 a ton was because people were buying more steel than was available in Canada. That $5 a ton increase was actually just a gift to the steel companies. And that $5 a ton increase in the cost of steel increased the cost of production, to which the minister referred a moment ago, and thereby it actually forced up the prices of commodities in Canada.
Then the minister will recall that, following the increase in price, there was a strike of the steel workers. They demanded that they be given their share of that $5 a ton. The result of the strike was that there was a substantial increase in the wages of the workers which, again, raised the cost of production of all commodities.
Now, can the minister honestly say that these two increases in the cost of production were the result of a shortage of goods?


Douglas Charles Abbott: I recall the incident to which my hon. friend refers, but it was in 1946, in the period of post-war inflation. I would hope that we might not have to enter into an extended discussion of inflationary forces of that time when we have before us this resolution relating to personal income tax. There was another debate on that subject earlier in the session, which arose from an
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amendment to a motion to go into supply. At that time the cost of living was discussed. I can only say that what I have expressed represents the opinion I genuinely hold. I am quite prepared to concede, of course, that others may hold a different view; but I cannot give a more specific answer than that.


John Horne Blackmore: The point is that people in the House of Commons should come to grips with the problem of inflation, and not talk in generalities. There are many assumptions in the minister's position which, in my judgment, cannot be substantiated by the facts.
The whole question as to the validity of this impost, so far as it is looked upon as an anti-inflationary measure, depends upon whether or not there is actually in Canada a shortage of goods in reference to the amount of working purchasing power. There is no doubt about that. If that is so, then there could not be anything more pertinent to the question than this very discussion of inflation. It would be quite impossible to have anything more pertinent or more relevant than that. I believe the minister would agree on that point.
Then I would ask the minister this, simply because the people of Canada deserve to have an answer: If it could be found that there is a surplus of goods in Canada over what there was six months ago, then would it not be feasible and sound to create money and to spend it into circulation

because that money would not cause any increase in price.
I do not propose to enter into a discussion of that matter tonight, but I do believe that before the discussion of these budget resolutions is concluded the minister ought to attempt to show the House of Commons that he is justified in these outrageous imposts. He can say the people in Great Britain are being heavily taxed and that the people in the United States are being heavily taxed but that is no reason why the Canadian people should be so taxed, unless the situation in Canada justifies it.
If production in Canada is such that we can create money, instead of demanding it from the people-


Mr. Hellyer:: The wrong time.


John Horne Blackmore: Never mind whether it is the wrong time or not. With you it is always the wrong time to discuss these matters. It is always the wrong time with the hon. member, because he cannot answer this argument, and the minister cannot answer it.


Paul Theodore Hellyer: I know more about your
theory than you give me credit for.

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John Horne Blackmore: If you know anything
about it, then get up and show it, and we will find out then what you know.
I am sorry, Mr. Chairman, but I had to deal with this young chap over here. There are a lot of people who think they know a lot until they are asked to prove it. If it is possible because of our large production to create that money then obviously these taxes are not necessary. Time and again we have heard it admitted that we could get revenue from increased production. If we have increased production, why cannot we get the revenue without taking it out of the pockets of the people?
In fairness to himself I think the minister ought to furnish statistics to establish the validity of the position he has taken. I maintain that the minister cannot show that the increases in prices which have resulted in this thing we call inflation are the result of surplus money in circulation. They are the result of direct and deliberate manipulation. I mentioned before how the price of steel was manipulated. These men simply 6aid that they were going to raise the price of steel $5 per ton. They did not care whether people needed steel. They did that and the government agreed with them and ever since then the people have been paying the shot. There is no question about that. That thing has pyramided until I wager it would be astonishing if the minister got the actual figures to show just how much the people of Canada have lost because of that increase of $5 per ton in steel. Until he is able to do so and until my brilliant young friend over here is able to do that I think it would be just as well for them to reserve judgment.
I do not think I shall say anything more about this. In the light of what I have said tonight I hope the minister will not say that this discussion is not relevant.


Douglas Charles Abbott: I did not say it was
not relevant.


John Horne Blackmore: I would not be surprised if before we got finished with these budget resolutions I asked the minister to indicate just how much knowledge his department actually has.


Major James William Coldwell: I do not like to renew a previous discussion, but the minister made a statement regarding United Kingdom taxes so I went upstairs to see if I could not find something authoritative on what profits taxes are imposed in Great Britain. I have that information here in rather short form. After depreciation the net profit is taxed in the following way:	First, the nation takes 30
per cent of the profits which were to be distributed in dividends.
[Mr. Hellyer.l


Douglas Charles Abbott: That is before the last budget; it is now 50 per cent.


Major James William Coldwell: That 30 per cent is now 50 per cent?


Douglas Charles Abbott: On the distributed profits.


Major James William Coldwell: I referred to the previous budget because I had the figures. Second, the nation takes 10 per cent of the undistributed profits; third, the nation imposes an income tax of nine shillings in the pound on what is left after the profits taxes and the depreciation allowances have been deducted.


Douglas Charles Abbott: The taxpayer takes credit for that.


Major James William Coldwell: Then the nation takes
another nine shillings in the pound from personal incomes of shareholders as well as extra sums from those whose incomes are subject to surtax:


Douglas Charles Abbott: The nine shillings is a credit against the tax paid by the individual.


Major James William Coldwell: That is not the way I read it.


Douglas Charles Abbott: That is confirmed by my officials.


Major James William Coldwell: 
Douglas Charles Abbott: 
Major James William Coldwell: There is another tax of nine shillings in the pound which is collected.


Douglas Charles Abbott: That is merely deducted by the corporation and the shareholder takes credit for it. There is no double taxation under that tax.


Major James William Coldwell: It is paid by the corporation.


Douglas Charles Abbott: But the shareholder takes credit for it in his return. It is really a deduction at the source.


Major James William Coldwell: There is a different rate of taxation on earned and unearned income.


Douglas Charles Abbott: That is right; we have that also through the investment income surtax.


Major James William Coldwell: Then there is the surtax. I am simply pointing out that when the minister made the statement that there was a 10 per cent tax he did not give the whole picture.	.


Douglas Charles Abbott: That is in addition. What my hon. friend is saying now is that there is a 10 per cent profits tax on undistributed income.


Major James William Coldwell: And 50 per cent on the distributed income.


Douglas Charles Abbott: That is right.


Major James William Coldwell: Then there is nine shillings in the pound for which the minister says the shareholder gets credit although this document does not indicate it.


Douglas Charles Abbott: That is now nine shillings sixpence.


Major James William Coldwell: In any event it is a much more substantial tax than I think most of us understood the minister to say when he was discussing this at an earlier stage.


Douglas Charles Abbott: I think the hon. member has proved the point I was trying to make.


Major James William Coldwell: No.


[Stage Direction]
Paragraph agreed to.
3. That, for the purpose of computing income from an. office or employment for the 1951 or a subsequent taxation year, there may be deducted certain amounts paid in respect of
(a)	travelling expenses that the officer or employee was required by the contract of employment to incur.
(b)	professional membership dues where the officer or employee was required by the contract of employment to maintain his professional status.
(c)	office rent or salary to an assistant or substitute required by the contract of employment to be paid by the officer or employee,
(d)	supplies consumed directly in the course of
the employment for which the officer or employee was required by the contract of employment to pay, or	[DOT]
(e)	union dues.
Stanley Howard Knowles: I am sure the committee
will not be surprised if I say that I welcome heartily this paragraph, and one clause of it in particular, namely the last one which consists of the two words "union dues". I welcome the fact that these are now to be allowed as an exemption for income tax purposes. I am grateful for the decision that has been made by the minister and I will not take the time to remind him of all that was said against this proposal on his behalf by his parliamentary assistant on February 26.


Douglas Charles Abbott: And by myself over the course of years. I shall deal with that in a moment.


Stanley Howard Knowles: The Minister of Finance
opposed it in person in former years, but it just happened that on February 26 of this year it was the parliamentary assistant who led the attack against my motion asking for this change. However, I am not going to go into all that. As I said on one other
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occasion, it is good to know that persistence pays. It is good to know that by hammering away we can persuade the minister to see the justice of some of the things we are arguing for.
I was convinced when I raised this matter for the first time several sessions ago, as I have been convinced every time I have moved an amendment or motion respecting it, that the claim of trade unionists to have their dues allowed as a deduction for income tax purposes was a perfectly justifiable one. From correspondence I have had from trade unionists across the country since the announcement was made on the night of April 10 I can say this move on the part of the government is most welcome.


Douglas Charles Abbott: I should like to say a word
as to why this was done. As my hon. friend has said, he has been most assiduous in urging this on the government for a number of years. However, I know he will forgive me when I say he was not the first one that raised it. It has been urged for many years in the past.


Stanley Howard Knowles: Certainly; it was even in
the Income Tax Act in 1945.


Douglas Charles Abbott: The position with respect to union dues and a number of other things was this: The information which my predecessor got during the war was that the only deductions which were allowed from salaries and wages were some allowances for the running trades who were on a mileage basis. That was then extended to include all railway employees of. the running trades. My hon. friend is familiar with that. It was then extended to clergymen. My information up to the last two or three weeks was that those were the only deductions allowed. I was somewhat surprised to be informed by officials of the Department of National Revenue that in that respect I had been mistaken, and they too had apparently been mistaken. We found that in some parts of the country certain other allowances had been made. I think probably the hon. member for Cape Breton South will know for example that certain miners were allowed to deduct the expense of explosives they were using when they were on a piece work basis, and so on. There were some similar deductions of that kind.
I felt that if that was the case, and if it could be administered, it should be continued. Having arrived at the point where we were going to go into that field of deductions, I came to the conclusion that union dues should be given the same treatment. It is for that reason that they are included in the resolution now before the house. There

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will be a definition in the bill as to what constitutes union dues. It will include the fees paid by civil servants to associations which are formed for the purpose of promoting better conditions of work and employment. They might not come technically within the ordinary understanding of union dues, but I hope it will be found that there is a clear definition of what constitutes union dues when the bill is brought before the house.


Stanley Howard Knowles: Could the minister give any further details as to that definition now?


Douglas Charles Abbott: I would prefer not to do so. I think it would be better for the committee to have the definition before it. Then we can discuss it and see whether or not the committee considers the definition is adequate. I think the other items are pretty well self-explanatory. They are items which the Department of National Revenue have told me they can administer without any serious risk of abuse on the part of people who claim these particular deductions. It will be seen that they are all directly related to the contract or work which is being performed.


James MacKerras Macdonnell: There are one or two questions I should like to ask the minister. First of all, I am asked this question with respect to subparagraph (e), which the minister has just been discussing, and I should like to put it on the record and ask to have it answered. I should like to know whether this includes the amount of pension assessments which are necessary or compulsory for union members to retain their membership standing.


Douglas Charles Abbott: I will answer that part, but I would prefer to have the detailed discussion of this matter when we have the section before us. Pension assessments as such will not ' be included in this item because they are deductible under another provision in the act having to do with approved pension plans. Therefore pension contributions as such will not be eligible for deduction under this section. However, I would suggest to the committee, if it meets with their approval, that the detailed discussion as to what union dues will include should await the discussion of the definition itself. I will be ready to listen to any suggestion that may be appropriate to make it a clear definition.


James MacKerras Macdonnell: Does the
phrase "contract of employment" imply a written contract?


Douglas Charles Abbott: No, contract in the legal sense.


James MacKerras Macdonnell: Just a working arrangement. Another matter which has been brought specially to my attention is [Mr. Abbott.l
the position of actors. I am told in a letter from one of them that they are not given the same status in Canada as they are in the United States and Great Britain. He says in part:
Surely, sir, Canadian artists have had a singular struggle to gain recognition and a not too steady income without being burdened with unjust and illogical taxation. Both in the United States and in Great Britain the professional status of the free lance artist is recognized.
Is the minister familiar with that matter? Is that problem before the department?


Douglas Charles Abbott: I will have to inform myself as to that. I am making a note of it, and I will give the answer at a later stage. I am not familiar with it, and the officials in front of me are not in a position to give me all the information that my hon. friend wants.


James MacKerras Macdonnell: Perhaps the minister would like me to bring to his attention the material I have.


Douglas Charles Abbott: I would be very happy if the hon. member would do that.


Stanley Howard Knowles: I should like to say a further word to the minister regarding the definition of trade union dues. I accept his suggestion that we wait for further discussion until we have the definition in the bill before us. He said when that time comes he will listen attentively to any suggestions that we make. If the definition seems to have any flaws in it, will he be prepared at that time to listen to suggestions that are made and perchance accept some of those suggestions?


Douglas Charles Abbott: Of course. We want to get the right definition. My officials have discussed it. They have done their best to draft what they think is appropriate. It may not be possible to distribute the bill tomorrow if we should conclude tonight but I would hope that it would be available by Saturday. My intention is to allow it to stand for four or five days, probably a week, for study by members.


Stanley Howard Knowles: My point is that usually when a printed bill comes before us we can make all the speeches we want but cannot persuade the minister to make any changes.


Douglas Charles Abbott: I think my hon. friend will recognize that in this sort of thing, as in most other things for that matter, I try to keep an open mind, and I want to get the right sort of definition.


Stanley Howard Knowles: That's good.


Clarence Gillis: If the minister has any difficulty in arriving at a definition I shall be glad to help him. I am not going to pursue that matter any further but will wait for the

bill. However, there are two matters of exemption that I should like to mention while we are dealing with exemptions because there is no other place to do it. The first one-and the minister himself brought it to my attention-is the question of miners, particularly those working underground, who have to purchase safety clothes such as shoes, a certain type of safety hat, and explosives. Explosives are not exempt for taxation purposes at this time. The minister might take that into consideration because practically everyone in a business in this country is permitted to deduct the legitimate expenses of operating that business. I think a man who has to buy shoes, a hat and explosives, which run into quite a bit of money a year, for the purpose of earning his income, should be permitted to deduct their cost for taxation purposes.
The second point I want to bring to the minister's attention is one about which the Department of National Revenue is a bit confused. I brought it to the department's attention on two or three occasions, and I got a mixed-up decision. I am not blaming them for that because perhaps this type of exemption of medical expenses applies to only one part of the country. The Department of National Revenue confused it with regular medical associations that collect from the individual and then pay his expenses for hospital and doctor. In the type of medical organization I have in mind that is not done. For example, the coal miners of Nova Scotia pay a doctor a dollar a week or $52 a year each as insurance. The doctor only supplies an examination and prescription. The individual pays for his medicine. The doctor keeps that money and pays nothing out of it. The type of service he gives is to diagnose your trouble and prescribe medicine.
In the second place the individual pays $52 a year to a hospital on a subscription basis. For that he gets ward treatment and ordinary services. I have brought two or three cases to the attention of the Department of National Revenue. The person affected, whose income was under $3,000 a year, had some $400 odd in medical expenses that year, minus this $104 by way of insurance, and he wanted to put in that $104 which he had paid the doctor and hospital on that subscription basis with his over-all hospital bill to make up the 4 per cent of his net income as an exemption for medical purposes. I know that whoever answered my letters confused that payment he made with payments made to associations that operate across the country and pay all medical bills. There is nothing paid back out of that $104, however. When
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the minister is reviewing this matter of exemptions I hope he will take these questions into consideration.


Douglas Charles Abbott: I will not take time to deal with them tonight, but I will consider the points my hon. friend has raised.


Mr. Argue:: I approve of the provision including union dues among the amounts which may be deducted for income tax purposes. The minister has now said that the definition will include fees to civil service associations, even though technically they may not be trade unions, and I am all for that. Before the minister draws up the final definition, however, I would like him to consider whether it might not also cover, as I think it should, the dues paid to farmers' unions and other farm organizations. It seems to me that if we are going to make this provision for professional people, for trade unionists and for civil servants, the same provision should be made for farmers.


Douglas Charles Abbott: My understanding is that the farmer is a businessman, self-employed. This has reference to people on salaries and wages. However, I will make a note of that and be prepared to deal with it when we are discussing the section.


Stanley Howard Knowles: In that case will the farmer be able to deduct those payments as an expense, as has been the case right along with doctors and lawyers?


Douglas Charles Abbott: I could not answer that offhand. If it is a trade association I should think he would be able to do so. I have never even considered the position.


[Stage Direction]
Paragraph agreed to.
4. That the governor in council be authorized to make regulations under which the income tax of members of the armed forces on their service income will be paid in full in respect of the pay and allowances of each pay period by a deduction therefrom in accordance with a special table subject to the right of any member to file a return on an annual basis.
George Randolph Pearkes: What happens in the case of a man whose total income would not be taxable? Let me give the example of a university student who goes to camp for the summer, and who otherwise would not have any deductions. Will deductions be made monthly?


Douglas Charles Abbott: I am told that is provided for in the table. I had hoped to take a little time on this resolution to put before the committee some considerations in connection with the complete exemption from taxation of those serving in foreign theatres. Perhaps it would be equally convenient if I were to do that on the bill. I want to review our experience.

Income Tax Act
I am sure many hon. members here, particularly the hon. member for Nanaimo, are familiar with some of the difficulties we ran into during the last war. I should like to deal with them, to outline what we did and the problems we had to face, but I think perhaps I should not attempt to do that on this resolution this evening.
This is a proposal for a very simplified form of tax collection from the armed forces, where a table will provide for complete deduction. They will not be required to file a return if they do not have income in excess of $50 beyond their service pay. There will be an. allowance of $50 in lieu of charitable donations and so on; but it will be always open to the serviceman to file a return if it is more beneficial to him to do so. Of course the serviceman who is comparatively wealthy, who has an income in addition to his service pay, will be required to file a return and of course will get credit for the deductions made. My people tell me this new system has received the wholehearted endorsation of the national defence department. They believe it is a forward step over what we have had in connection with tax collection in previous, times, and I think it is an excellent system.
When we are considering the section of the bill I should like to say a word on the general question of the taxation of our armed forces. That is something about which I know a good deal, since Mr. Ilsley had me spend a good deal of time on it during the last war. I should like to put before the committee some facts with relation to it; in view of the late hour I would prefer not to do that tonight.


Howard Charles Green: I point out to the minister that this question is of the utmost importance and also of the utmost interest to people from coast to coast in Canada.


Douglas Charles Abbott: I agree.


Howard Charles Green: Many newspapers of all political stripes have taken very strong stands with regard to the taxation of men who are fighting in Korea. I believe the conscience of the Canadian people is very much troubled over this suggestion that the men who are doing the fighting in Korea are going to have to pay income tax. I hope the minister has changed his mind and that these men are not going to be taxed; but I am afraid we cannot wait until the bill is brought in to find out.


Douglas Charles Abbott: It might be an excellent idea for me to deal with it tonight, then.


Howard Charles Green: I would suggest that the
minister tell us now just what he is proposing with respect to the taxation of Canadians fighting in Korea.


Douglas Charles Abbott: Perhaps that is a good suggestion, and I will be happy to do so. The subject, as I say, is one with which I had a good deal of experience during the last war. As was pointed out by the hon. member for Royal the other day, such income tax exemption as has been suggested is very much more beneficial to the more highly paid officers than to the men. In the case of officers of the rank of general or higher it may be worth $140 a month or more. In the case of the other ranks it may be a few dollars a month at most.
The isubject had considerable attention during the last war. The three main headings under which I would like to discuss it are: first, the inequities and anomalies created within the services by tax exemptions granted in world war II; second, the inequities and anomalies created in relation to the rest of the taxpayers by the armed forces exemption; and third, the difficult administrative problems encountered in carrying into effect the armed services tax provisions in world war II. As hon. members know, in the United Kingdom armed services there is no such tax exemption and never has been.
Under the first heading, the inequities and anomalies created within the services by the tax exemptions we had in world war II, here is the history. We started out by granting an exemption for the ranks and leaving the officers to pay the full tax. That had the troublesome result, of course, that the higher levels of non-commissioned officers were receiving perhaps several hundred dollars more net income than the lowest levels of commissioned officers. Under those conditions it was understandable that warrant officers, for example, would be unwilling to take out commissions. The second step was the rectification of this anomaly by granting an exemption based on income. Any single member of the armed forces with an income of less than $1,600 was exempt, and married members were exempt at higher amounts. In addition a complicated tax credit formula was employed to gradually increase the tax above those exemptions until the full rate of tax was paid. At the same time a complete exemption for servicemen overseas was granted.
The fact that some servicemen in Canada were required to pay tax created considerable resentment. This group felt that it was a condition of their enlistment that they be required to perform their duties anywhere, and it was not of their own choice that they

happened to be stationed in Canada. I know from personal experience that there was a very real sense of grievance among those groups. Many officers, of course, whose services were required here, would far rather have been engaged in active duty at the front, and they felt that the imposition of income tax upon them completely disregarded that circumstance.
In the third place the position of one group of officers in Canada, who would otherwise have been taxable, was recognized by the granting of an exemption. These were the personnel of the services whose duties were normally performed either in the air or afloat. In the practical administration of that test, as I am sure a good many service members of the house will recall, it was necessary to adopt some simple rule as to eligibility. Unfortunately once a specific test had been adopted the temptation was presented to qualify for income tax exemption by meeting the requirements of the test. In short, it became possible to fly or float into a tax-exempt position, and of course it was impossible to establish any system for determining whether or not the exemption had been really earned. I might add that the possibility of obtaining complete exemption by a stint of duty overseas was also one that presented a constant temptation. I found, in my own brief experience in national defence, that there was a certain tendency to post people overseas in order to give them tax exemption, although they may never have got very much further than headquarters in London.
In the next place, another group that warranted special treatment were members of service units stationed outside of Canada but not overseas. Around the fringes of the continent there were units stationed in Labrador, Newfoundland, Kiska, and other places, which were from time to time engaged in combat duty. The position of this group was recognized by exempting them from half the tax that would have been payable had they been stationed in Canada.
These provisions covered the main elements in the tax provisions for the armed forces in world war II. They were the products of attempts to deal with specific situations as they arose, and represent one of the most unsatisfactory experiences in the history of Canadian income tax law.
My second heading refers to the inequities and anomalies created in relation to the rest of the taxpayers by the armed forces exemption. Even more serious than the problems involved in working out the tax positions of the armed services themselves
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were the innumerable difficulties to which the exemption gave rise in relation to the rest of the taxpayers. The exemption for the forces was generally interpreted as being a reward for the risk they underwent in performing their duties and, as a result, almost every other group, both overseas and in Canada, that was engaged in an activity involving an element of risk sought similar preferred treatment. Outside of Canada the firefighters, the auxiliary services, the merchant marine, the ferry command, radio and press reporters at the front and other groups, at one time or another, requested income tax exemption in whole or in part. Some form of concession was finally extended to many of these, and I had something to do with working out those concessions, particularly with respect to the auxiliary services. At home taxpayers who were test pilots, civilian flying instructors, employees of shell filling plants, fishermen exposed to the risk of being sunk by enemy action, and even miners engaged in dangerous work underground producing metals for the war effort represented that on the basis of the armed forces precedent they should also be given some exemption from tax. As far as I can recall, no concessions were given to any of these groups in Canada but it was, and still is, utterly impossible to draw clear, logical and reasonable distinctions in this field. From the initial precedent of the armed forces exemption, claim after claim was made by groups who, in many respects, were performing duties involving equal danger, and who could be excluded only by holding to rigid and arbitrary lines of distinction.
The third, and of course least important, heading is the difficult administrative problems encountered in carrying into effect the armed forces tax provision in world war II. I think there I should point out that, although the principal difficulties encountered were problems of equity as between taxpayers, there were very serious administrative difficulties in carrying out this complex and cumbersome system. The mere fact that there were so many different graduations and classifications of taxability made the whole system most complicated for the Department of National Defence, the Department of National Revenue, and of course for the serviceman himself.
In the light of that experience, my belief is that any consideration which should properly be given to our servicemen who are serving in foreign fields should really relate to their remuneration and not to a tax exemption, if for no other reason in addition to the ones I have indicated here that such tax exemption is manifestly of far greater

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value to the wealthy man or higher officer and of relatively little value to the man serving in the ranks. Perhaps I should add that the revenue implications are not of particular significance so far as the persons who are now engaged in Korea or who may later be serving in Europe are concerned. I was not in the house, but I believe the hon. member for Broadview made some suggestions about combat pay or something of the sort. It is not the function of the Minister of Finance to go into those matters, but if consideration is to be given to that type of service-let me say at once I do not say it should not be-


Howard Charles Green: Is it going to be?


Douglas Charles Abbott: Perhaps my hon. friend could put that to the Minister of National Defence. I do not think it should take the form of an income tax exemption because such an exemption is of very little value to the ordinary serviceman and is of very considerable value to the high ranking officer or the officer who has a private income. It does lead to all these very difficult lines of distinction which I have outlined. I speak, as I say, with a very close personal knowledge of this matter because I had to live with it during the last three or four years during the war.


James MacKerras Macdonnell: I appreciate fully the minister's earnestness in this statement he has made. Reverting to what he said towards the end of his remarks about an alternative, that is to say about combat pay, danger pay or whatever you want to call it-


Douglas Charles Abbott: It might, for example, be
called foreign service pay.


James MacKerras Macdonnell: That seems to me a very practical point indeed, because I do believe that, as the member for Van-couver-Quadra has said, people's consciences are aroused. There is a great desire to have something done. Now, what is the practical thing to do? The Minister of National Defence is not here tonight, so is the Minister of Finance prepared to have this item left and, in the meantime, discuss this matter with the Minister of National Defence to see whether something can be worked out? While we desire to be co-operative I think there is no question but that the member for Van-couver-Quadra is right in saying that this is something to which the people wish to give expression. The minister has given a very formidable list of objections to income tax exemptions. Those of us who know something about the army, and about the way people get shifted or as the minister has said floated or flown into income tax exemptions, vividly describes the difficulties which arise.

Can the minister make a practical suggestion with regard to combat or danger pay, so that we will not feel this thing is being closed out? That is our difficulty.


Douglas Charles Abbott: It will never be closed out. I shall be very glad to discuss that aspect with my colleague the Minister of National Defence. I have already indicated that I have no personal objection to that sort of thing. I believe that is the proper way to handle it, if something needs to be done. I recognize the feeling which has been referred to this evening. I do not think the proper way to give recognition to that sort of thing is by creating what I conceive to be a most inequitable and unfair way of giving a benefit to higher income people. If anything should be done, I believe the proper basis is something in the nature of, let us call it, combat pay or special pay for service'of this kind. I had hoped that we could have the benefit of discussion by some of our members who served in the last war under this system, because they will have seen the practical application of it.
I had hoped we might be able to conclude the resolutions this evening, but perhaps we cannot. I wanted to get the bills distributed. We can discuss this again on the bill. I do not believe we should hold up the resolution. For the reasons which I have given, and which I am convinced are sound ones, I do not think the income tax exemption is either fair or desirable. There probably are other ways of making provisions for what hon. members have in mind than the income tax exemption.


Howard Charles Green: I am afraid that the minister is looking at this problem from the point of view of the last war rather than from that of conditions which exist at the present time.


Douglas Charles Abbott: Present conditions can quickly change to other ones, as my hon. friend knows.


Howard Charles Green: If there is a change, then of course there can be a change here too.


Douglas Charles Abbott: My hon. friend will recall the chain of events that I recounted in the last war.


Howard Charles Green: The fact was that during the last war we had the utmost difficulty in persuading the Minister of Finance to grant any exemption at all. I remember our fighting over here, day after day; and it was extremely difficult to get him to grant any exemption. Finally, when the exemption was granted, it was only a half exemption; and to some of the groups to whom the Minister of Finance has referred tonight exemption was not given when, obviously, it should have

been given to them because they were risking their lives. What is the position today in 1951? We have a brigade fighting in Korea; and certainly anyone who is fighting in Korea should not be asked to pay income tax on the pay he is receiving for doing that fighting.


Douglas Charles Abbott: The British brigade fighting in Korea are.


Howard Charles Green: That may be.


Douglas Charles Abbott: And the Americans.


Howard Charles Green: Just a minute ago the minister was quoting the British the other way.


Douglas Charles Abbott: The British are taxed in Korea.


Howard Charles Green: The minister talks about high
ranking officers. The highest-ranking officer we have in Korea is a brigadier.


Douglas Charles Abbott: It would be worth $172 a month to him.


Howard Charles Green: That may be. The minister is being quite petty, I think, when he tries to base his defence on that.


Douglas Charles Abbott: I should have said $142.91.


Howard Charles Green: The government has a pretty weak defence when the best it can do is to try to throw a few bricks at the higher officers.


Douglas Charles Abbott: Oh, no. I am just talking about fairness; it would be $6.85 for the privates.


Howard Charles Green: There is a principle involved here, namely whether these men who are actually doing the fighting and are offering their lives in order to protect this country should be charged income tax on that pay.
I submit that Canadians from one end of the country to the other are against any such thing being done, and are perfectly prepared to make up the difference in taxation from their own pockets. The minister himself has said tonight that this question does not involve the revenues to any extent; there is not a great deal of taxation involved. But what is involved is the treatment of these young men; and that is a serious factor. This is a matter of principle, and not just a matter of a few dollars. I have here a letter written to the minister by a wife in Vancouver. I think it sets out the position clearly. It reads in part as follows:
Surely the men who answered the government's call to fight for our great nation, some never to return to their wives and families, should receive some small considerations.
In today's trying times of international strife, we must all come to expect higher taxes and restricted luxuries, to assist our country's great efforts toward preparedness. But why should our gallant men in uniform, fighting overseas, be expected to pay for the bullets they are firing, the clothes they are wearing, and the food they are eating?
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That seems to be the picture from the point of view of the person in the street. I have here an editorial which appeared in the issue of April 28 of the Vancouver Sun, which is a supporter of this government. The heading is "Taxation where it Hurts", and it reads in part as follows:
Imagine the public uproar if the defence minister ordered our soldiers in Korea to buy their own bullets.
Yet that's just about the government's attitude when it insists that they go on paying income tax. This mean gouge is bravely defended by Finance Minister Abbott as the principle that "no group" should escape income tax.
Well, the men in Korea aren't just another "group" of Canadians. They're men who voluntarily gave up all comfort and safety in a time of high prosperity to risk their lives thousands of miles from home. Among the things they're defending is the freedom of other Canadians to stay home and enjoy the prosperity they've sacrificed.
There are editorials from many other papers to the same effect. I am afraid that the government is brushing this appeal aside because of administrative difficulties.


Douglas Charles Abbott: No, it is not.


Howard Charles Green: The minister has stressed the fact that it is just too hard for the income tax-


Douglas Charles Abbott: The minister had stressed the fact that it is most unfair.


John Horne Blackmore: What about equality of sacrifice?


Douglas Charles Abbott: That is right.


John Horne Blackmore: How much equality of sacrifice is there about that?


Howard Charles Green: Most of the minister's complaint is based on the difficulties of administration:	they could not do this and they
could not do that, and therefore-


Douglas Charles Abbott: My hon. friend is not being fair. I put that consideration last, and I said it was far less important than the others.


Howard Charles Green: All the way through the minister stressed the difficulties of administration. Not only did he do that, but there was also this argument about the higher officers, to the effect that they were going to get away with something and therefore they had to be taxed.


Douglas Charles Abbott: A disproportion.


Howard Charles Green: That type of argument is used only when there is a bad case to defend; and that is exactly what we are meeting here tonight. I suggest to the minister that further consideration be given to this question. I also appeal to the private members on the Government side of the house. They must

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know, just as well as we do, that this thing is wrong. It is not a matter of partisan politics at all.


Douglas Charles Abbott: I completely agree.


Edward Turney Applewhaite: Rot.


Howard Charles Green: Who said "rot"?


Edward Turney Applewhaite: I did.


Howard Charles Green: You are the man who is talking rot. This thing is wrong. These men who are fighting for us should not be charged income tax on their pay. As to the men in the forces at home, different considerations may apply. I am not arguing now on their behalf at all. But I say that the men who have gone to Korea should be exempted from income tax on their pay, and that they should be so exempted at this session. That particular case can be dealt with. There is no excuse for trying to bring in other people in order to break down the argument made for the men in Korea. Let us deal with them and them alone in considering this question at this time. If that is done, I am sure that neither the minister nor any other member of the government can get up on the floor of this house and justify the levying of an income tax on these men who are fighting in Korea. It is eleven o'clock, Mr. Chairman.


Douglas Charles Abbott: I move that the committee rise, Mr. Chairman, and report progress. I hope that, before we conclude the discussion of this section, we shall have the benefit of
the views of some hon. members who have had practical experience in this war. I would particularly welcome the views of the hon. member for Nanaimo and the hon. member for Broadview; and I know there are a number of others.


James Arthur Ross: In the last war, you mean.
Paragraph stands.
Progress reported.



BUSINESS OF THE HOUSE

Mr. Fournier (Hull):: Tomorrow we shall withdraw from the order paper Bill No. 193, respecting weights and measures and replace it by a new bill in a day or so. The motion will probably be made by the Minister of Trade and Commerce (Mr. Howe). Then we shall continue with the budget resolutions. When discussion of them is completed, we shall go into committee of supply and take up the estimates of the Departments of Labour and Fisheries.


Howard Charles Green: You are not taking the Canadian Commercial Corporation bill?


Alphonse Fournier: Oh, yes. Before we go into supply, we shall try to study Bill No. 284, to amend the Canadian Commercial Corporation Act.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Friday, May 18, 1951